ISQS 3344 - Burns, TTU – Final
Questions and Answers
Bob Barker, a store owner in New York City, takes night business classes and is
forced to consider the economic order quantity (EOQ) model to improve his
business. Using the constant demand assumption in the EOQ model, what would
Bob's average cycle inventory be?
✓ ~~~ average cycle inventory = half of the order quantity
Bright Tots Toys manages its inventories by utilizing a fixed-quantity system.
Batteries and plastic are included in their inventory. A manager reports that the
company frequently finds itself dealing with a stockout of plastic. The 7-day demand
for plastic is 50 pounds, on average. Further, the standard deviation of 7-day
demand is approximately 5. The lead time from the plastic supplier is 21 days. The
acceptable service level is 95 percent, and the number of standard deviations
required to reach the acceptable service level is 1.645. With all of this in mind, the
reorder point for plastic with safety stock is ________.
✓ ~~~ more than 125 pounds but less than or equal to 175 pounds
Storage Craft Inc., a cabinet manufacturer, employs ABC analysis to define their
inventory value. The inventory contains wood, copper, adhesive, and carbon fiber. If
carbon fiber accounts for 10 percent of the items and 55 percent of the total dollar
value; adhesive accounts for 50 percent of the items and 7 percent of the total dollar
value; copper accounts for 25 percent of the items and 18 percent of the total dollar
value; and wood accounts for 15 percent of the items and 20 percent of the total
dollar value, ________ can be classified as a class C item.
, ✓ ~~~ adhesive
The demand for apricots in Jacksonville ranges from 250 to 270 tons daily, every day
of the year. The demand is satisfied daily without any significant issue. This demand
for apricots can be categorized as _______.
✓ ~~~ static demand
Which type of analysis can solve a single-period inventory problem?
✓ ~~~ Marginal economic analysis.
Which system or model should be used when the inventory situation is the following:
strictly one order is placed for a good in anticipation of a future selling season and its
demand is subject to considerable uncertainty?
✓ ~~~ The single-period inventory model
________ can be described as a surplus amount of inventory which is kept,
exceeding the average amount needed to meet demand.
✓ ~~~ Safety stock inventory
Which type of costs can be representative of service interruptions or backorders for
external customers, from the standpoint of inventory costs?
✓ ~~~ Stockout costs
Recall ABC inventory analysis. Choose the most accurate statement below as it
pertains to class C items.
, ✓ ~~~ They can be managed using automated computer systems.
Stable demand is typically referred to as ________.
✓ ~~~ static demand
Consider a fixed-period system (FPS). Choose the most accurate statement
regarding an FPS.
✓ ~~~ It orders sufficient stock at the time of review to bring the inventory position up to the
replenishment level (M).
A buyer for Fuzzy Threads, an apparel store, orders ear muffs approximately 6
months before the start of winter. Fuzzy Threads will be holding a March clearance
sale to sell any surplus goods leftover after the last day of February. Each set of ear
muffs costs $100 and sells for $140. The expectation is for any remaining stock to be
sold off during the March sale at the price of $80. You can assume a uniform
probability distribution ranging from 200 to 500 items describes the demand. The
expected demand is 300. In the context of the single period inventory system, the
optimal order size Q* must satisfy the condition _______.
✓ ~~~ P(demand ≤ Q*) = 2/3
Which of the following is an individual asset or item stored at a particular location,
within the context of inventory management?
✓ ~~~ Stock-keeping unit
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