Test 2 - Inventory Multiple Choice

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Created by: Lida

Safety inventory is carried because
- a)demand forecasts are accurate.
- b)demand forecasts are uncertain.
- c)adequate supplies are available.
- d)excess product was manufactured.
- e)forecast demand exceeds the actual demand.
The trade-off that a supply chain manager must consider when planning safety inventory is
- a)increasing product availability versus increasing inventory holding costs.
- b)decreasing product availability versus decreasing inventory holding costs.
- c)increasing product availability versus raising the level of safety inventory.
- d)decreasing product availability versus decreasing the level of safety inventory.
- e)none of the above
The fraction of replenishment cycles that end with all the customer demand being met is the
- a)customer fill rate.
- b)product fill rate.
- c)order fill rate.
- d)cycle service level (CSL).
- e)none of the above
The appropriate level of safety inventory is determined by
- a)the uncertainty of both demand and supply.
- b)the desired level of product availability.
- c)the desired level of cycle inventory.
- d)the processes in a supply chain are divided into 2 categories depending all of the above
- e)a and b only
The distinction between product fill rate and order fill rate is
- a)not significant in a single product situation
- b)significant in a single product situation.
- c)not significant when a firm is selling multiple products.
- d)both a and c
- e)None of the above
Which of the following is correct?
- a)Average inventory = cycle inventory + safety inventory
- b)Average inventory = cycle inventory - safety inventory
- c)Average inventory = cycle inventory x safety inventory
- d)Average inventory = cycle inventory / safety inventory
- e)none of the above
The expected shortage per replenishment cycle (ESC) is
- a)the units of demand that are not satisfied from inventory in stock in a given replenishment cycle.
- b)the units of demand that are satisfied from inventory in stock in a given replenishment cycle.
- c)the average units of demand that are not satisfied from inventory in stock per replenishment
- d)the average units of demand that are satisfied from inventory in stock per replenishment cycle.
- e)none of the above
Given a lot size of Q (which is also the average demand in a replenishment cycle)
- a)the fraction of demand lost is thus ESC + Q.
- b)the fraction of demand lost is thus ESC – Q.
- c)the fraction of demand lost is thus ESC/Q.
- d)the fraction of demand lost is thus ESC x Q.
- e)none of the above
For the same safety inventory, an increase in lot size
- a)decreases the fill rate but not the cycle service level.
- b)increases the fill rate but not the cycle service level.
- c)decreases both the fill rate and the cycle service level.
- d)increases both the fill rate and the cycle service level.
- e)none of the above
The required safety inventory
- a)increases with an increase in the lead time and the standard deviation of periodic demand.
- b)decreases with an increase in the lead time and the standard deviation of periodic demand.
- c)remains stable with an increase in the lead time and the standard deviation of periodic demand.
- d)increases with a decrease in the lead time and the standard deviation of periodic demand.
- e)none of the above
Which of the following is not an approach to reduce the level of safety inventory’s holding costs required in a way that does not affect product availability?
- a)Reduce the lead time.
- b)Reduce the underlying uncertainty of demand.
- c)Reduce the cost of material coming from suppliers.
- d)All of the above are approaches.
- e)None of the above are approaches.
Continuous review policies for inventory replenishment require safety inventory to cover demand during
- a)lead time only.
- b)the review interval only.
- c)both lead time and the review interval.
- d)neither lead time or the review interval.
- e)lead time when it exceeds the review interval.

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