Essay on Operations Flashcards Ch 13

1554 Words Jun 23rd, 2013 7 Pages
1. One important use of inventories in manufacturing is to decouple operations through the use of work in process inventories.
True False
TRUE
Decoupling operations is an important use of inventories.
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2. The objective of inventory management is to minimize the cost of holding inventory.
True False
FALSE
The objective of inventory management is to allow satisfactory customer service while keeping costs down.
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3. A retail store that carries twice the inventory as its competitor will provide twice the customer service level.
True False
FALSE
There is a limit to how high service level can go; if the competitor's service level is 90%, the retailer can't double that.
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4. The overall objective of inventory management is
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True False
FALSE
Having an occasional stockout is not necessarily a sign of inadequate inventory control.
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22. Annual ordering cost is inversely related to order size.
True False
TRUE
Annual ordering cost decreases as order size increases.
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23. The total cost curve is relatively flat near the EOQ.
True False
TRUE
Thus approximating the EOQ can be a very good solution.
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24. Because price isn't a factor in the EOQ formula, quantity discounts won't affect EOQ calculations.
True False
FALSE
If quantity discounts are offered, the EOQ might vary based on different holding costs.
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25. In the quantity discount model, if holding costs are given as a percentage of unit price, a graph of the total cost curves will have the same EOQ for each curve.
True False
FALSE
Total cost curves will differ across the price levels.
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26. In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve.
True False
FALSE
The optimum quantity might actually be when the discount is passed up.
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27. ROP models indicate to managers the time between orders.
True False
FALSE
ROP models indicate when, with regard to on-hand inventory, orders should be placed.
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28. When to order can be calculated by the ROP and expressed as a quantity.
True False
TRUE
ROP models indicate when, with regard to on-hand inventory, orders should be placed.
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29. The…

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