Strayer JWI550 Knowledge Check 3 Latest 2020 October

JWI550 OPERATIONAL EXCELLENCE

Knowledge Check 3

Question 1A car-service center orders new tires using the continuous review system. The expected demand is 420 tires per year, and the lead time (the time necessary for the shipment of tires to arrive after it has been ordered) is one week on average. The manager decides to hold safety stock of 20 tires. Find the reorder point, the number of tires in stock when it is time for the car-service center to order the next tire delivery. Assume 52 weeks in each year.               

A. 20

B. 26

C. 28

D. 30

Question 2A company has days of inventory equal to 23.6 days. Which of the following best describes the meaning of this number?

A. The company replenishes its inventory every 23.6 days on average.

B. It takes about 23.6 days for an inventory replenishing order to come through.

C. An item typically stays 23.6 days in inventory before being sold.

D. It is estimated that the whole inventory can be sold in 23.6 days.

Question 3What does it mean when we say that a furniture-making company has a reorder point of 150 for its stock of chairs?

A. The manager orders stock replenishment every 150 days in a periodic review system.

B. Stock replenishment orders are always for 150 chairs.

C. Stock replenishment orders take 150 days to fulfill.

D. The manager orders stock replenishment as soon as the current inventory is at or below 150 chairs.

Question 4A restaurant requires 200 lbs of coffee beans per year. The coffee beans are delivered in 10-lb bags. To keep the coffee quality high (that is, at peak freshness), the restaurant does not store the coffee beans for more than a year. There is no perceptible carrying cost for keeping the coffee bean bags in the restaurant storage. Ordering cost is $5. How often should the restaurant order the coffee beans in order to minimize the cost of replenishment?

A. 1 bag once every month

B. 10 bags once every 6 months

C. 20 bags once every year

D. 200 bags once every year

Question 5An event that indicates that it is time to order stock replenishment is called a replenishment trigger.

A. True

B. False

Question 6A company replenishes its inventory using a periodic review system, and it uses service factor z to calculate the safety stock required for a target in-stock rate. What would be the consequence of using a negative service factor z less than zero?

A. At the ends of order intervals, the company is more likely to be out of stock than not.

B. At the ends of order intervals, the company will be always out of stock.

C. Using negative z is mathematically forbidden in this calculation because it is akin to division by zero.

D. Only the absolute value of z matters because normal distribution is symmetric.

Question 7The formula for the critical fractile of a single-period model in terms of the cost of underage, cu, and the cost of overage, co, is cu/(cu + co).

A. True

B. False

Question 8In a periodic review inventory model, the order quantity is calculated as:

A. Expected demand during the order interval + safety stock

B. The target order-up-to inventory level – current inventory on hand and on order.

C. The maximum target inventory level – the minimum target inventory level.

D. The optimal order quantity given by the economic order quantity formula.

E. Expected demand during lead time + safety stock.

Question 9A company replenishes its inventory using a periodic review system. How will the annual inventory turns of the company be affected if the company increases the frequency of this review system?

A. It will not be affected at all.

B. It will decrease.

C. It will increase.

D. There is no way to tell from this information.

Question 10A newsvendor sells all of her newspapers toward the end of most days because she always orders fewer copies of newspapers than the average daily demand. Assume that this is a rational choice rather than a mistake. Which of the following is the  explanation for this strategy?

A. The cost of overage is zero.

B. The cost of overage must be greater than the cost of underage.

C. The cost of underage must be high.

D. The cost of underage must be greater than the cost of overage.