Inventory Management
Final Exam Questions
Course Introduction
Inventory Management is a crucial aspect of operations within businesses and supply chains, focusing on the effective control and supervision of goods, materials, and products throughout their lifecycle. This course introduces students to fundamental concepts, methods, and tools used for tracking inventory levels, ordering, storage, and distribution. Topics include inventory classification, demand forecasting, replenishment strategies, safety stock calculation, inventory valuation, and systems such as Just-In-Time (JIT) and Economic Order Quantity (EOQ). Emphasis is placed on optimizing inventory to balance costs with service levels and ensuring that organizations can meet customer demands efficiently.
Recommended Textbook
Operations and Supply Chain Management 14th Edition by F. Robert Jacobs
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Chapter 1: Introduction
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Q1) Delivering is not considered in supply chain analysis when outside carriers are contracted to move products to customers.
A)True
B)False
Answer: False
Q2) "Operations" refers to manufacturing and service processes used to transform resources employed by a firm into products desired by customers.
A)True
B)False
Answer: True
Q3) The ability to maintain balance in a system is referred to as ______________.
Answer: sustainability
Explanation: Sustainability is the ability to maintain balance in a system.
Q4) Lean manufacturing refers to just in time production coupled with total quality control.
A)True
B)False
Answer: True
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Chapter 2: Strategy
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Q1) An order winner is a set of screening criteria that permits a firm's products to be considered as possible candidates for purchase.
A)True
B)False
Answer: False
Q2) Productivity is a relative measure.
A)True
B)False Answer: True
Q3) One of the competitive dimensions that form the competitive position of a company when planning its strategies is delivery speed.
A)True
B)False Answer: True
Q4) In a partial measure of productivity, the denominator of the ratio would include all resources used or all inputs.
A)True
B)False Answer: False
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Chapter 3: Design of Products and Services
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Q1) A key tool of a quality function deployment team is the house of quality matrix.
A)True
B)False Answer: True
Q2) DFMA stands for design for manufacturing and assembly.
A)True
B)False Answer: True
Q3) Value analysis/value engineering has as its objective to increase product quality and reduce costs.
A)True
B)False Answer: False
Q4) Specialized design firms tend to have highly developed processes that support the needs of particular industries.
A)True
B)False
Answer: True
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Chapter 4: Project Management
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Q1) For an activity in a CPM analysis, the early start time is 8 and the late start time is 10.Which of the following statements is true?
A)The late finish is 12.
B)The early finish is 10.
C)The slack for this activity is 2.
D)The duration of this activity is 2.
E)The activity is on the critical path.
Q2) Earned value management (EVM) is a technique for measuring project progress in an objective manner.
A)True
B)False
Q3) In CPM analysis, it is generally expected that the relationship between activity direct costs and project indirect costs will be which of the following?
A)Positively related
B)Optimally related
C)Negatively related
D)Not related
E)Fractionally related
Q4) What do the initials EVM stand for?
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Chapter 5: Strategic Capacity Management
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Q1) The smaller the capacity cushion, the better.
A)True
B)False
Q2) Capacity planning that involves hiring, layoffs, some new tooling, minor equipment purchases, and subcontracting is considered as which one of the following planning horizons?
A)Intermediate range
B)Long range
C)Short range
D)Current
E)Upcoming
Q3) If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity cushion?
A)25 percent
B)100 units per hour
C)75 percent
D)125 percent
E)133 percent
Q4) What is a capacity cushion, and why would a firm have one?
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Chapter 6: Learning Curves
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Q1) The point at which the scale economy curve and the learning curve intersect is called the capacity optimum.
A)True
B)False
Q2) The 25<sup>th</sup> repetition of a job is timed at 100 minutes.If the learning curve for this job is 90 percent, what is the estimated time for the 180<sup>th</sup> repetition of this job? ________________________
Q3) What are some of the factors that stimulate learning?
Q4) You have just timed a person doing a job a few times.The first time it took the person 25 minutes, the second time it took 20 minutes, and the third time it took 17.55 minutes.Which learning curve unit improvement factor should you use?
A)25 percent
B)75 percent
C)80 percent
D)85 percent
E)90 percent
Q5) Describe an example of industrial learning where learning curve analysis might be useful.
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Chapter 7: Manufacturing Processes
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Q1) Assume a fixed cost for a process of $120,000.The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50.Which of the following is the number of units that has to be produced and sold to break even?
A)5,000 units
B)6,000 units
C)8,000 units
D)11,000 units
E)12,000 units
Q2) The closer the customer is to the customer order decoupling point, the longer it takes the customer to receive the product.
A)True
B)False
Q3) Which of the following is not a basic type of process structure?
A)Product-process matrix
B)Work center
C)Manufacturing cell
D)Assembly line
E)Continuous process
Q4) Distinguish between a work center and a manufacturing cell.
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Chapter 8: Facility Layout
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Q1) When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time?
A)Upgrade the equipment
B)Assign a roaming helper to support the line
C)Split the task between two workstations
D)Speed up the assembly line transfer mechanism
E)Use a more skilled worker
Q2) Assembly lines are a special case of a project layout.
A)True
B)False
Q3) Using the assembly-line balancing procedure, what is the required cycle time if the production time in minutes per day is 2,400 and the required output per day in units is 1,200?
Q4) A workcenter layout is similar to the basic production layout format of job-shop.
A)True B)False
Q5) Is office layout more akin to retail service layout or to manufacturing layout? Explain your answer.
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Chapter 9: Service Processes
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Q1) When recovering from a defective service encounter, a botched task calls for an apology.
A)True
B)False
Q2) Which of the following is a characteristic that can be used to guide the design of service systems?
A)Services cannot be inventoried.
B)Services are all similar.
C)Quality work means quality service.
D)Services businesses are inherently entrepreneurial.
E)Even service businesses have internal services.
Q3) Service guarantees can be used at the service design stage to focus the firm's delivery system on the things it must do well to satisfy the customer.
A)True
B)False
Q4) In the service-system design matrix, what kind of production efficiency is expected from a service encounter designed to be "face-to-face loose specs"?
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Chapter 10: Waiting Line Analysis and Simulation
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Q1) The admissions system in a hospital for patients is an example of a single-channel, single-phase queuing system.
A)True
B)False
Q2) Being user-friendly and easy to understand typically means that the simulation produces less accurate results.
A)True
B)False
Q3) The customer arrivals in a queuing system come almost exclusively from finite populations.
A)True
B)False
Q4) Which of the following is not a suggestion for managing queues presented in the textbook?
A)Try to divert your customer's attention when waiting.
B)Segment the customers.
C)Encourage customers to come during the slack periods.
D)Train your people to be friendly.
E)Periodically close the service channel to temporarily disperse the line.
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Chapter 11: Process Design and Analysis
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Q1) Which of the following terms describes the time a unit spends actually being worked on together with the time spent waiting in a queue?
A)Cycle time
B)Flow time
C)Run time
D)Setup time
E)Efficiency
Q2) Process analysis can help answer many important questions such as why change in a process is necessary.
A)True
B)False
Q3) When a make-to-order production process is used, production is based on forecasts.
A)True
B)False
Q4) A triangle is conventionally used in a process flowchart to represent a storage area or queue.
A)True
B)False
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Chapter 12: Six Sigma Quality
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Sample Questions
Q1) Philip Crosby states that the correct cost for a well-run quality management program should be under 2.5 percent of sales.
A)True
B)False
Q2) Which of the following is not an analytical tool used in Six-Sigma quality improvement programs?
A)Flowcharts
B)Run charts
C)Control charts
D)Pareto diagrams
E)Decision diagrams
Q3) One of the tools common to all quality efforts is leadership.
A)True
B)False
Q4) A quality guru named Philip Crosby defined quality as fitness for use.
A)True
B)False
Q5) Design quality refers to the inherent value of the product in the marketplace.
A)True
B)False
Page 14
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Chapter 13: Statistical Quality Control
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Q1) The capability index (Cpk) indicates the position of the mean and tails of a process's variance relative to design specifications.
A)True
B)False
Q2) You have just used the capability index (Cpk) formulas to compute the two values "min [2, 2.5]." Which of the following is the proper interpretation of these numbers?
A)The true capability index value is 2.5.
B)The mean of the production process has shifted to the left of the design limits.
C)The mean of the production process has shifted to the right of the design limits.
D)The mean has not shifted at all.
E)The true capability index value is between 2 and 2.5.
Q3) If the fraction defective is 0.12 based on a sample size of 16, the standard deviation used in the p-chart is about 0.08.
A)True
B)False
Q4) What does it mean when we say that a process is capable?
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Chapter 14: Lean Supply Chains
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Q1) In setting up a kanban control system, you need to determine the number of kanban card sets needed.If the expected demand during lead time is 24 per hour, safety stock is 10 percent of the demand during lead time, the container size is 5, and the lead time to replenish an order is 5 hours, what number of kanban card sets is needed?
Q2) Uniform plant loading is a process of smoothing the production activity flow to dampen the reaction waves that normally occur in response to schedule variations.
A)True B)False
Q3) In Japanese manufacturing, automation and robotics are used extensively to perform dull or routine jobs so employees are free to focus on important improvement tasks.
A)True B)False
Q4) In setting up a kanban control system, you need to determine the number of kanban card sets needed.If the expected demand during lead time is 50 per hour, the safety stock is 20 percent of the demand during lead time, the container size is 4, and the lead time to replenish an order is 2 hours, what number of kanban card sets is needed?
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Chapter 15: Logistics Distribution, and Transportation
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Q1) What are the two "hidden costs" that are often overlooked in determining the total cost of a facility location decision?
(1) __________________________________ (2) __________________________________
Q2) What is the name for a group of countries that have agreed on a set of special arrangements governing the buying and selling of goods between member countries?
Q3) In which of the following situations should we not use the transportation method of linear programming?
A)To find a new site location for a plant
B)To minimize costs of shipping n units to m destinations
C)To maximize profits of shipping n units to m destinations
D)To determine which corner of a street intersection to locate a retail service facility
E)To locate a finished goods distribution warehouse
Q4) Services typically have multiple site locations to maintain close contact with customers.
A)True
B)False
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Chapter 16: Global Sourcing and Procurement
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Q1) Which of the following of Fisher's product categories includes fashionable clothing, personal computers, and other products that typically have a very brief life cycle?
A)Functional products
B)Dysfunctional products
C)Innovative products
D)Bullwhip products
E)Value density products
Q2) A financially driven reason for outsourcing is that it can turn fixed costs into variable costs.
A)True
B)False
Q3) When customers allows their supplier to manage an item or group of items for them, it is called ________________________
Q4) A firm that controls most of the activities in its supply chain is said to be vertically integrated.
A)True
B)False
Q5) The acronym RFP stands for: ________________________
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Chapter 17: Enterprise Resource Planning Systems
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Q1) _______________ indicates where cash comes from (its source), where cash is spent (its use), and the net change in cash for the year.
Q2) ERP systems can be inefficient at handling the numerous transactions that document the activities of a company.
A)True
B)False
Q3) Data warehouses are useful mechanisms to support daily routine tasks.
A)True
B)False
Q4) What are some ways in which ERP can be used to link functional areas of a firm?
Q5) What is the primary goal of an ERP system?
A)The integration of data processes and data storage
B)Creating consistent definitions across all functional areas
C)The efficient handling of the transactions as goods move through each step of the process
D)The scheduling of machinery to minimize downtime and reduce scrap
Q6) ____________________________ is a term that refers to delivering hosted ERP services over the Internet.This can significantly reduce the cost of ERP.
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Chapter 18: Forecasting
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Q1) MAD statistics can be used to generate tracking signals.
A)True
B)False
Q2) Decomposition of a time series means identifying and separating the time series data into its components.
A)True
B)False
Q3) In a forecasting model using simple exponential smoothing, the data pattern should remain stationary.
A)True
B)False
Q4) Which of the following forecasting methodologies is considered a qualitative forecasting technique?
A)Simple moving average
B)Market research
C)Linear regression
D)Exponential smoothing
E)Multiple regression
Q5) Describe the collaborative planning, forecasting, and replenishment (CPFR) technique.
Page 20
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Chapter 19: Sales and Operations Planning
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Q1) Pricing for a service should primarily relate to the cost of providing the service and has little to do with capacity issues the service provider might face.
A)True
B)False
Q2) The International Aggregate Planning Society (IAPS) has developed aggregate operations planning guidelines that are followed by a majority of manufacturing firms.
A)True
B)False
Q3) Which of the following is considered a "pure" production planning strategy?
A)Variable workforce, stable work hours
B)Lag demand
C)Level playing field
D)Stable workforce, variable work hours
E)Product warehouse
Q4) In a services organization, strategic capacity planning follows process planning. A)True
B)False
Q5) Describe the aggregate sales and operations planning process.
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Chapter 20: Inventory Management
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Q1) Shortage costs are precise and easy to measure.
A)True
B)False
Q2) In making any decision that affects inventory size, which of the following costs do not need to be considered?
A)Holding costs
B)Setup costs
C)Ordering costs
D)Fixed costs
E)Shortage costs
Q3) Some inventory situations involve placing orders to cover only one demand period or to cover short-lived items at frequent intervals.
A)True
B)False
Q4) In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.
A)True
B)False
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Chapter 21: Material Requirements Planning
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Q1) In MRP, how is demand information for a level 0 (zero) item derived?
Q2) Which of the following is considered a primary report in an MRP system?
A)Planning reports
B)Performance reports
C)Exception reports
D)Planned order schedules
E)Cycle counting reports
Q3) "Projected available balance" is a term referring to unsold finished goods inventory.
A)True
B)False
Q4) MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item.
A)True
B)False
Q5) When implemented correctly, MRP links all areas of the business.
A)True
B)False
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Chapter 22: Workcenter Scheduling
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Q1) Johnson's rule, a priority rule used in sequencing production jobs, is used only in production situations where we are dealing with one machine or one stage of production activity.
A)True
B)False
Q2) A work center has five jobs assigned to it.They are labeled, in the order of their arrival in the shop, as jobs A, B, C, D, and E.The work center may work on only one job at a time and must complete any job it starts before starting another job.Job A has a processing time of 6 days and is due to the customer in 9 days.Job B has a processing time of 2 days and is due in 16 days.Job C has a processing time of 4 days and is due in 10 days.Job D has a processing time of 3 days and is due in 7 days.Job E has a processing time of 5 days and is due in 12 days.Using the slack time remaining priority rule, what will be the average lateness of these orders?
Q3) The assignment method of job sequencing is a special case of the transportation method of linear programming.
A)True
B)False
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Chapter 23: Theory of Constraints
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Q1) Looking at the loads that are placed on each resource by the products that are scheduled through them is called process flow profiling.
A)True
B)False
Q2) Describe how cost accounting is sometimes antithetical to TOC?
Q3) What is the term that refers to the normal variation about a mean or average?
Q4) According to the theory of constraints, a non-bottleneck is any resource where capacity is less than the demand placed on it.
A)True
B)False
Q5) What is a word indicating a resource whose capacity is less than the demand placed on it?
Q6) Rather than try to adjust the master production schedule to change resource loads, it is more practical to control the flow at each bottleneck or CCR to bring capacities in line.
A)True
B)False
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Chapter 24: Health Care
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Q1) At the Mayo Clinic, SPARC is an acronym for "Specialty Patient Automated Referral Console," a computerized system that improves patient flows through the hospital.
A)True
B)False
Q2) Which trend in health care uses expert system software programs to arrive at a diagnosis? ____________________________________
Q3) The customer service dashboard reports hospital scores on issues such as meal quality, mortality rate, and percentage of transfusions having adverse reactions.
A)True
B)False
Q4) About 500 diagnostic-related groups have been developed for Medicare as part of the prospective payment system.
A)True
B)False
Q5) The flow of work through a hospital is sometimes referred to as a care chain. A)True
B)False
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Chapter 25: Operations Consulting
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Q1) What is the most common method for improving efficiency in consulting firms?
Q2) Which of the following is not a problem definition tool from the operations consulting tool kit?
A)Customer surveys
B)Computer simulation
C)Gap analysis
D)Issue trees
E)Five forces model
Q3) In the five forces model, which of the following is not one of the five forces?
A)Buyer power
B)New technologies
C)Supplier power
D)Substitute products
E)Potential entrants
Q4) A responsibility chart is used in operations consulting in planning the task responsibilities for a project.
A)True
B)False
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