OM FINAL EXAM Multiple Choice
Choose the option for which the expected value criterion is the most suitable approach
for decision making.
Select one:
A. On the last Friday of each month the manager of a clinic can choose from a dozen
alternative staffing plans for the next month. Each staffing plan has costs and benefits,
and these values have been calculated. There are six different scenarios for demand
during the next month. Similar decisions are made every month.
B. The manager of a hospital with a 100 beds has to decide on the location a second
facility with 150 beds, part of a major, high-risk expansion program. A bad decision
could result in financial failure of the company.
C. The supply chain manager for a small manufacturing facility faces a decision to
select the preferred supplier for a component. There are many choices and tariffs and
trade disputes loom on the horizon. There is only vague and unreliable data for
probabilities of the - ANS-A.
In the basic EOQ model, (D (annual demand), S is ordering cost/order, and H (holding
cost/unit/year). The EOQ is _____________________
Select one:
A. inversely proportional to annual demand.
B. proportional to annual demand
C. inversely proportional to the square root of annual demand
D. proportional to the square root of annual demand.
E. none of the other choices - ANS-D.
In the basic EOQ model, (D (annual demand), S is ordering cost/order, and H (holding
cost/unit/year). The EOQ is _____________________
Select one:
A. inversely proportional to the square root of holding cost/unit/year
B. proportional to the square root of holding cost/unit/year
C. proportional to the square of holding cost/unit/year
D. inversely proportional to the square of holding cost/unit/year
E. None of the other choices - ANS-A.
The ____________ method of forecasting is used for short term demand forecasts
under stable conditions.
Select one:
A. Delphi
, B. Regression based forecast (Causal, quantitative, internal and causal data)
C. Time series forecast (quantitative, internal data)
D. all of the above
E. None of the above - ANS-C.
An oil company requires an estimate of gasoline demand in the US in 2035. The best
method to forecast this demand is _________________
Select one:
A. Time Series using Simple Exponential Smoothing
B. Time Series using seasonal and trend adjustments
C. Causal Forecasting using regression
D. Judgmental Forecasting using Delphi
E. None of the other choices - ANS-D.
An restaurant requires a forecast of the number of daily customers to develop a
schedule for staffing. Daily demand varies by day of the week and has increased slowly
over time. The best method to forecast this demand is _________________.
Select one:
A. Time Series using Simple Exponential Smoothing
B. Time Series using seasonal and trend adjustments
C. Causal Forecasting using regression
D. Judgmental Forecasting using Delphi
E. None of the other choices - ANS-B.
A store orders inventory using a perpetual inventory system which places an order
whenever the inventory level drops to the re-order point. The re-order point
______________.
Select one:
a. none of the other choices.
b. decreases when the lead time increases
c. increases when the re-order period increases
d. decreases when the service level increases
e. increases when the service level increases - ANS-E.
The re-order point (ROP) in perpetual inventory re-order system (Q system) is the sum
of average demand during the lead time and the safety stock. The safety stock is based
on the service level (increases with service level) and standard deviation of demand
during the lead time.
One reason for holding inventory is _________________.
Select one:
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