Question

1. Cycle counting:

a) means that we count all articles after a specified time period

b) leads us to count A items more frequent then B items

c) require all A items to be counted the same day

d) is a legal requirement

2. Extra units in inventory to help reduce stockouts are called:

a) reorder point.

b) safety stock.

c) just-in-time inventory.

d) all of the above.

3. The EOQ model is

a) not very useful in practice since the assumptions are

unrealistic

b) finds the optimal safety stock

c) is quite useful, due to the fact that the optimum is quite flat

d) depending on the standard deviation of the demand

e) has an impact of the re-order-point

4. The safety stock in re-order point system:

a) shall with a certain probability cover demand exceeding

the expected during the lead-time

b) is a non-linear function of lead-time

c) is not depending on the order-quantity

d) all of the above.

Answer 1

Answer 1.

Cycle Counting: option b) which is leads us to count A items more frequent then B items. becuase cycle count procedure includes counting of A items more frequent then B items.

Other options a) is incorrect because cycle count does not include counting of all articles and option c) is incorrect because it includes only counting of A items which is incorrec and also option d) is incorrect because there is no legal requirement to adobt cycle count procedure for inventory counting.

Answer 2.

Extra units in inventory to help reduce stockouts are called: option b) safety stock because this stock includes units which were used in the event of stockouts.

Other options a) reorder point means inventory level where order to the supplier can be made and it does not reflects units to reduce stock out positions. option c) just in time inventoy means inventory with no lead time and it can not me termed at extra units in invenotry to help reduce stockouts. option d) All of the above is also incorrect because reorder point and justintime inventory does not help in reducing stockouts.

Answer 3.

The EOQ MODEL is. option a) not very useful in practice since the assumptions are unrealistic. Siince EOQ model has unrealisting assumptions like;

-   annual demand is constant and known in advance,
-   the unit purchase price is constant,
-   all orders are delivered in one batch and at the same time,
-   the delivery time is constant and known,
-   the order cost is constant,
-   the unit storage cost is constant,
-   there are no stock shortages.

Other options b) since optimal safety stock is determined by (Maximum daily usage * Maximum lead time in days) – (Average daily usage * Average lead time in days) and does not include EOQ level therefore it is incorrect option.

option c) in the present dynamic environment demand, price of product, storage cost etc are changing day by day therefore it does not useful for the fact that the optimum is quite flat

Option d) EOQ formula includes annual consumption, acquitition cost, price of product and storate cost therefore standard deviation of demand has no role in determing economic order quantity. further it assume demand is constant.

optioin e) reorder point includes usage, lead time and safety stock level therefore no relation with EOQ.

Answer 4. d) all of the above

a) shall with a certain probability cover demand exceeding the expected during the lead-time. The safety stock which is the minimum level of inventory that is held as a protection against shortages due to fluctuations in demand.

other options b) Since safety stock is determined by using (Maximum daily usage * Maximum lead time in days) – (Average daily usage * Average lead time in days). thus we can say that Safety stock in reorder point is a non-linear function of lead-time

option c) Safety stock can not be determined by order quantity therefore we can say that Safety stock in reorder point is not depending on the order-quantity.