QUESTION $1$

Most inventory models are based on

A$)$ profit maximization.

B$)$ cost minimization.

C$)$ optimum influence on demand.

D$)$ minimizing setup times.

E$)$ minimizing lead time.

$5$ points

QUESTION $2$

Which of the following costs of quality are incurred when customers redeem a warranty?

A$)$ costs of prevention

B$)$ costs of detection$/$appraisal

C$)$ external costs of failure

D$)$ internal costs of failure

$5$ points

QUESTION $3$

A process when in control produces a normally distributed output with a mean of $200$ and a mean range of $20.$ When using samples of size $8,$ then which of the following is the upper control limit of the R chart?

A$)38\mathrm{.}5$

B$)40$

C$)26$

D$)34\mathrm{.}3$

E$)37\mathrm{.}3$

$5$ points

QUESTION $4$

A firm has four different production processes. Data for each of these processes is given below. Which process will not consistently produce products within design specifications?

A$)$ Process $1$

B$)$ Process $2$

C$)$ Process $3$

D$)$ Process $4$

$5$ points

QUESTION $5$

The goal of the basic EOQ model is to:

A$)$ minimize order size

B$)$ minimize order cost

C$)$ minimize holding cost

D$)$ minimize the sum of purchasing and ordering costs

E$)$ minimize the sum of ordering and holding costs

$5$ points

QUESTION $6$

The ABC method of classification classifies inventory by:

A$)$ unit costs

B$)$ annual costs

C$)$ annual usage

D$)$ unit costs x annual usage

E$)$ annual costs x annual usage

$5$ points

QUESTION $7$

Which of the following is not an advantage of the "few suppliers" concept?

A$)$ suppliers' willingness to participate in JIT systems

B$)$ trust

C$)$ vulnerability of trade secrets

D$)$ creation of value by allowing suppliers to have economies of scale

E$)$ suppliers' willingness to provide technological expertise

$5$ points

QUESTION $8$

Outsourcing:

A$)$ transfers traditional internal activities to outside vendors.

B$)$ utilizes the efficiency that comes with specialization.

C$)$ allows the outsourcing firm to focus on its key success factors.

D$)$ All of these are true of outsourcing.

E$)$ None of these is true of outsourcing.

$5$ points

QUESTION $9$

Control charts for variables are based on data that come from

A$)$ acceptance sampling

B$)$ individual items

C$)$ averages of small samples

D$)$ averages of large samples

E$)$ the entire lot

$5$ points

QUESTION $10$

Local optimization is a supply chain complication best described as

A$)$ the result of supply chains built on suppliers with compatible corporate cultures

B$)$ obtaining very high production efficiency in a decentralized supply chain

C$)$ the prerequisite of global optimization

D$)$ optimizing one's local area without full knowledge of organizational needs

E$)$ the opposite of the bullwhip effect

$5$ points

QUESTION $11$

Which of the following statements about ABC analysis is false?

A$)$ ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.

B$)$ In ABC analysis, $"$A$"$ Items are tightly controlled, have accurate records, and receive regular review by major decision makers.

C$)$ In ABC analysis, $"$C$"$ Items have minimal records, periodic review, and simple controls.

D$)$ ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.

$5$ points

QUESTION $12$

Among the advantages of cycle counting is that it

A$)$ makes the annual physical inventory more acceptable to management

B$)$ does not require the detailed records necessary when annual physical inventory is used

C$)$ does not require highly trained people

D$)$ allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory

E$)$ does not need to be performed for less expensive items

$5$ points

QUESTION $13$

Consider a firm with a net income of $$20$ million, revenue of $$60$ million and cost of goods sold of $$25$ million. If the balance sheet amounts show $$2$ million of inventory and $$500,000$ of property, plant & equipment, what is the inventory turnover?

A$)20\mathrm{.}00$

B$)10\mathrm{.}00$

C$)15\mathrm{.}00$

D$)4\mathrm{.}16$

E$)12\mathrm{.}50$

$5$ points

QUESTION $14$

Which of the following statements about quantity discounts is false?

A$)$ The cost$-$minimizing solution may or may not be where annual holding costs equal annual ordering costs.

B$)$ In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available.

C$)$ If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule.

D$)$ The larger annual demand, the less attractive a discount schedule will be$.$

E$)$ The smaller the ordering cost, the less attractive a discount schedule will be$.$

$5$ points

QUESTION $15$

A successful TQM program incorporates all of the following except

A$)$ continuous improvement

B$)$ employee involvement

C$)$ benchmar