SCM final exam questions & answers 2024/2025
If lead time increases, what should happen to the reorder point?
A. It should stay the same.
B. It should decrease.
C. It should increase. - ANSWERSC. It should increase
Which costs determine the Economic Order Quantity? (more than one answe...
If lead time increases, what should happen to the reorder point?
A. It should stay the same.
B. It should decrease.
C. It should increase. - ANSWERSC. It should increase
Which costs determine the Economic Order Quantity? (more than one answer)
A. Holding cost
B. Setup cost
C. Backroom storage cost
D. Margin - ANSWERSA. Holding cost
B. Setup cost
The Economic Order Quantity (EOQ) seeks to...
A. Minimize the setup cost and holding cost.
B. Maximize the products in stock.
C. Always avoid having a product out of stock.
D. Order the correct amount to avoid stock outs. - ANSWERSA. Minimize the setup cost and holding cost
As the order quantity decreases, what happens to inventory holding cost?
A. It should stay the same.
B. It should decrease.
C. It should increase. - ANSWERSB. It should decrease
As the order quantity decreases, what happens to setup cost?
,A. It should stay the same.
B. It should decrease.
C. It should increase. - ANSWERSC. It should increase
When using the continuous review model, what dictates when an order is placed?
A. Economic Order Quantity
B. Reorder point
C. Review interval
D. Cycle stock - ANSWERSB. Reorder point
If the forecast of demand increases, what will happen to the reorder point?
A. It should stay the same.
B. It should decrease.
C. It should increase. - ANSWERSIt should increase.
If a truck is late and no stockout actually occurred, which statement is accurate?
A. There was enough safety stock to cover the longer lead time.
B. There was enough cycle stock to cover the longer lead time.
C. The reorder point was adjusted because the truck was late.
D. These two things are not simultaneously possible. - ANSWERSA. There was enough safety stock to
cover the longer lead time.
When demand and lead time are uncertain, the reorder point is made up of which of the following?
(multiple answers)
A. Safety stock
B. Expected demand during the lead time
C. Economic Order Quantity
D. Holding cost - ANSWERSA. Safety Stock
B. Expected demand during the lead time.
,As a customer increases service level to 99% from 97%, what will likely happen?
A. The customer will hold more cycle stock.
B. The customer will increase safety stock.
C. Demand during lead time must increase.
D. The customer will decrease safety stock. - ANSWERSB. The customer will increase safety stock.
As lead time variability increases, what should happen to safety stock?
A. It should stay the same.
B. It should decrease.
C. It should increase. - ANSWERSC. It should increase
Which is an alternate (instead of analytical) approach to determine demand and lead time parameters?
A. Empirical
B. Estimated
C. Mathematical
D. Derived - ANSWERSA. Empirical
Inventory holding cost is derived from which two factors?
A. Service level and inventory carrying cost%
B. Inventory carrying cost % and item cost
C. Item cost and setup cost
D. Inventory carrying cost % and setup cost - ANSWERSB. Inventory carrying cost % and item cost
Which two basic questions does an inventory policy answer? (2 answers)
A. How much should be ordered?
B. Who should place the order?
C. When should an order be placed?
D. How much will the order cost? - ANSWERSA. How much should be ordered?
, B. When should an order be placed?
Which is a key factor when developing an inventory policy?
A. Margin %
B. Warehouse utilization
C. Labor cost
D. Forecast of demand or sales - ANSWERSD. Forecast of demand or sales
For a customer with a 99% service level, in how many replenishment periods out of 100 is the customer
willing to have a stockout?
A. 0
B. 1
C. 10
D. 100 - ANSWERSB. 1
What is the special problem posed by the newsvendor model?
A) Given uncertain, variable demand, the seller is likely to stock too many or too few with only a short
time frame to sell the product at full cost.
B) Given stable, predictable demand, the seller is likely to stock too many or too few with only a short
time frame to sell the product at full cost.
C) Given stable, predictable demand, the seller is likely to stock too many or too few with only a short
time frame to sell the product at full cost.
D) Given stable, predictable demand, the seller is likely to stock too many or too few with an extended
time frame to sell the product at full cost. - ANSWERSA
If the profit margin per unit decreases (all else equal), the optimal order quantity will ___________.
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