Question 1

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A bill of material specifies all of the following except

a.

How many of each component is needed

b.

A brief description of each component in the product

c.

Lot size and lead time of each component

d.

When a component is needed in the assembly process

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Question 2

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Which of the following is not true for forecasting?

Select one:

a.

Forecasts are rarely perfect

b.

Forecast for group of items is accurate than individual item

c.

Short range forecasts are less accurate than long range forecasts

d.

The underlying causal system will remain same in the future

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Using the Economic Order Quantity formula and the Total Cost formula and given the following data, what is the EOQ? Price = $100 Demand = 1,000 Ordering cost = $10 Interest = 5% Holding cost = $.50 Lag time = 5 days

a.

78 units

b.

68 units

c.

58 units

d.

48 units

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When we use an approach which implies that the forecast for the next time period should take into account the observed error in the earlier forecast for the current time period, then we are using:

Select one:

a.

Regression analysis

b.

Time Series analysis

c.

Exponential Smoothing

d.

Decision Tree analysis

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Which describes the random component of a time series?

a.

Climatic condition

b.

Wars, strikes, and other highly unpredictable events

c.

Manmade conventions causing shortrun upward and downward patterns in activities such as sales

d.

The longrun general movement in a time series (e.g. sales)

e.

Recurring and periodic, possessing a regular period or variation in a time series

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A company wants to produce hardware at a level rate and send 10 units to inventory. If their 6-month forecast reveals a total of 110 units demanded, what should be their monthly production rate?

a.

20

b.

18

c.

16

d.

10

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The choice of a forecasting method should be based on an assessment of the costs and benefits of each method in a specific application

Select one:

True

False

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A firm can participate in the quantity discount illustrated below when purchasing a product. It costs $20 to place an order each time. The holding cost rate is 20%. The annual demand for the product is 10,000 units. Leadtime for the product is 1 month.

Quantity Cost

<300 $12

300520 $10

>520 $ 9

What is the minimum total material cost that this firm can purchase and inventory this item while facing a quantity discount?

a.

90,894

b.

90,853

c.

100,894

d.

100,000

e.

90,468

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Policies based on ABC analysis might include investing:

a.

More in inventory security for C items

b.

The most time and effort verifying the accuracy of records for B items

c.

More in supplier development for A items

d.

Extra care in forecasting for C items