1) The lot-for-lot sizing rule is most beneficial for an item with which of the following characteristics? A.

High item cost value B. High setup cost C. Level and continuous demand D. Fixed batch size

2) If carrying costs were adjusted upwards for all items, with all other parameters remaining the same, economic order quantities would tend to do which of the following as compared to those for the current period ? A. Decrease slightly for one ordering cycle only. B. Increase and remain the same until the carrying cost is revised again. C. Decrease and remain the same until the carrying cost is revised again. D. Not be affected at all.

3) Which of the following is a valid reason to order a quantity other than that suggested by the EOQ formula, given that all other conditions for use of the formula are met? I. Inadequate shelf space II. Item subject to spoilage III. Cost of the item A. II only B. I and II only C. II and III only D. I, II, and III only

4) If the order quantity increases and the annual demand is constant, which of the following could occur? A. Carrying cost increases and ordering cost increases. B. Carrying cost increases and ordering cost decreases. C. Carrying cost and ordering cost do not change. D. Carrying cost decreases and ordering cost decreases. 5) Week Demand 1 170 2 190 3 180 4 200 5 195 6 205

Lead Time = 4 weeks Safety Stock = 50 Based upon the information below calculate the reorder point. A. 740 B. 790 C. 810 D. 1140

6) In which of the following replacement models do you need large amounts of safety stock? A. Reorder Point B. Time-phased Order Point C. Periodic Review D. Kanban

7) A supplier has established a minimum quantity of 50 units of a particular item and a rounding quantity of 10. The Fulbright Company only needs 10 units for a custom-engineered product. Which of the following actions should be taken? A. Order the rounding quantity of 10. B. Order the minimum quantity of 50. C. Order 50 and reject 40 in receiving inspection back to the supplier. D. Order 50 and dispose of 40 in receiving before the receipt is processed.

8) Opportunity costs include which of the following? A. Storage Facility Cost B. Risk of obsolescence C. Return on investment for other use of the money D. Damage Cost 9) The company uses a carrying cost value of 0.25. Which of the following is the most effective way for a planner to reduce actual carrying costs ? A. Reduce the carrying cost used in order quantity calculations to 0. B. Use an order quantity technique that is not based on carrying cost. C. Bypass central stores and stock received material near the point of use. D. Establish a number of days supply constraint to limit large order quantities.

10) The company has just negotiated to have all of the electronic components purchased from a local distributor changed to consignment. Which of the following actions need to be taken prior to the next receipt for the existing inventory ? A. Give the inventory to the supplier and convert the balances to consignment to standardize on the inventory classification. B. Issue the balances to WIP to zero-out raw material inventory. C. Record the on-hand balances as company-owned inventory so costs can be segregated. D. Reduce the unit costs to zero to eliminate payments to the supplier upon issue.

My Answers: 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) A C D B C C B C D C