Question 

25

Question text
The fraction of product demand that is satisfied from inventory is:
Select one:
a. Cycle service level.
b. Safety inventory.
c. Customer fill rate.
d. Order fill rate.
e. Product fill rate.

Previous page

Question 24

Question text
Which of the following risks is not unique to International supply chains?
Select one:
a. Customs duty
b. Currency fluctuations
c. Natural disasters
d. Political international sanctions
e. Customs duties

Question 23

Question text
Inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a
given period is:
Select one:
a. Security inventory.
b. Forecasted inventory.
c. Cycle inventory.
d. Safety inventory.
e. Demand inventory

Question 22

Question text
Which transportation network design option establishes an extra layer between suppliers and
retailers to store inventory and to serve as a transfer location?
Select one:
a. All shipping via central DC.
b. Shipping via DC using milk runs.
c. Direct shipping with milk runs.
d. Tailored network.
e. Direct Shipping network.

Question 21

Question text
Reorder point (RoP) equals-
Select one:
a. Average demand * Lead Time
b. Average demand/2 * Lead Time
c. Average demand * Lead Time + Safety Stock
d. Average demand * Lead Time – Safety Stock
e. Average demand/2 * Lead Time + Safety Stock

Question 20

Question text
Lead time is the gap between-
Select one:
a. When an order is placed and when payment is made
b. When an order is received and when it is used
c. When an order is placed and when it is received
d. When an order is acknowledged and when it is received
e. When an order is received and when it is put away

Question 19

Question text
The square root law is a relationship between-
Select one:
a. Total Cycle inventory and number of independent stocking locations
b. Total Finished Goods inventory and number of independent stocking locations
c. Total Raw Material inventory and number of independent stocking locations
d. Total WIP inventory and number of independent stocking locations
e. Total Safety inventory and number of independent stocking locations

Question 18

Question text
Average flow time resulting from cycle inventory is equal to:
Select one:
a. Cycle inventory/Demand + 1/Demand
b. Cycle inventory/Demand
c. Demand/Lot size + 1/Lot size
d. Lot size/Demand + 1/Demand
e. Cycle inventory/Demand + Cycle Inventory
Question 17

Question text
What is the Cycle Service Level (CSL) when: Average demand= 2,500/week, Standard deviation
of demand= 500 units/week, Reorder Point=6,000 and Lead time=2 weeks, ? (Assume the
demand is Normal distributed and no autocorrelation).
Select one:
a. 84%
b. 86%
c. 92%
d. 90%
e. 88%

Question 16

Question text
As compared with a decentralised distribution system, the centralised distribution system
generally requires-
Select one:
a. Lower inventories
b. Same inventories
c. Large variety of products
d. Higher inventories
e. Small variety of products

Question 15

Question text
A company that checks inventory status at regular periodic intervals and places an order to raise
the inventory level to a specified threshold is using-
Select one:
a. Daily review
b. Continuous review
c. Periodic review
d. Joint review
e. Occasional review

Question 14

Question text
The loss incurred by a firm for each unsold unit at the end of the selling season is-
Select one:
a. The cost of understocking the product
b. The cost of the product
c. The cost of overselling the product
d. The cost of stocking the product
e. The cost of overstocking the product

Previous page

Question 13

Question text
A company that tracks inventory and places an order for a lot size Q when the inventory declines
to the reorder point (ROP) is using-
Select one:
a. Periodic review
b. Joint review
c. Daily review
d. Occasional review
e. Continuous review

Previous page

Question 12

Question text
The use of one product to satisfy demand for a different product is-
Select one:
a. Product substitution
b. Price substitution
c. Information centralization
d. Specialization
e. Component commonality

Question 11

Question text
The fraction of replenishment cycles that end with all the customer demand being met is the-
Select one:
a. Cycle Service Level
b. Order fill rate
c. Customer service level
d. Product fill rate
e. Customer fill rate
Question 10

Question text
Cycle inventory exists because producing or purchasing in large lots allows a stage of the supply
chain to:
Select one:
a. Exploit customer orders and reduce cost.
b. Exploit economies of scale and raise cost.
c. Exploit customer orders and raise cost.
d. Exploit economies of scale and reduce cost.
e. Improve inventory accuracy.

Question 9

Question text
Continuous review policies for inventory replenishment require safety inventory to cover demand
during-
Select one:
a. Lead time only
b. The review interval only
c. Sales period only
d. Neither lead time or the review interval
e. Both lead time and the review interval

Question 8

Question text
Aggregation reduces the standard deviation of demand-
Select one:
a. Only if demand across the regions being aggregated is positively correlated and greater than 1
b. Only if demand across the regions being aggregated is perfectly positively correlated
c. Only if demand across the regions being aggregated is negatively correlated
d. Only if demand across the regions being aggregated is perfectly negatively correlated
e. Only if demand across the regions being aggregated is zero

Question 7

Question text
Which one of the following is correct?
Select one:
a. Average inventory = cycle inventory/(cycle inventory + safety inventory)
b. Average inventory = cycle inventory / safety inventory
c. Average inventory = cycle inventory + safety inventory
d. Average inventory = cycle inventory × safety inventory
e. Average inventory = cycle inventory - safety inventory
 Previous page

Question 6

Question text
Economies of scale in purchasing and ordering motivate a manager to:
Select one:
a. Increase the lot size and reduce cycle inventory.
b. Eliminate inventory.
c. Decrease the lot size and increase cycle inventory.
d. Decrease the lot size and cycle inventory.
e. Increase the lot size and cycle inventory.

Question 5

Question text
When demand is steady, cycle inventory and order lot size (Q) are related as:
Select one:
a. Cycle inventory = Q* Q
b. Cycle inventory = Q + 2/Q
c. Cycle inventory = Q * 2
d. Cycle inventory = Q
e. Cycle inventory = Q/2

Previous page

uestion 4

Question text
Normally functional products have-
Select one:
a. High profit margin
b. High product variety
c. Highly predictable demand
d. High stock out rate
e. High cost

Previous page

Question 3

Question text
Normally Innovative products have-
Select one:
a. Low stock out rate
b. Low predictable demand
c. Low product variety
d. Low profit margin
e. Low cost

Question 2

Question text
A high level of product availability requires-
Select one:
a. Small inventories and tends to reduce costs for the supply chain
b. Large lead times
c. Large inventories and tends to raise costs for the supply chain
d. Small inventories and tends to raise costs for the supply chain
e. Large inventories and tends to reduce costs for the supply chain

Previous page

Question 1

Question text
If average weekly demand is 10,000 units and standard deviation of the weekly demand is 500
units, then standard deviation of demand over 7 days will be-
Select one:
a. 500/7
b. 500/(7*7)
c. 500*Sqrt(7)
d. 500*7*7
e. 500*7