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Parts A and B are worth a total score of 40 marks and 60 marks respectively

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Parts A and B are worth a total score of 40 marks and 60 marks respectively.

 

Part A

 

Select the correct answer to each of the following questions:

 

Question 1

 

ABC analysis divides on-hand inventory into three classes,

based on:

 

a) unit price.

b) the number of units on hand.

c) annual demand.

d) annual dollar values.

 

Question 2

 

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

 

Question 3

 

The two most important inventory-based questions answered by the typical inventory model are:

 

a) when to place an order and the cost of the order.

b) when to place an order and how much of an item

to order.

c) how much of an item to order and the cost of the order.

d) how much of an item to order and with whom the order

should be placed.

 

Question 4

 

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.

 

Question 5

 

The difference(s) between the basic EOQ model and the production order quantity model is (are) that:

 

a) the production order quantity model does not require the assumption of known, constant demand.

b) the EOQ model does not require the assumption of negligible lead time.

c) the production order quantity model does not require the assumption of instantaneous delivery.

d) all of the above.

 

 

 

Question 6

 

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

 

Question 7

 

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.

 

Question 8

 

Capacity decisions should be made on the basis of:

 

a) building sustained competitive advantage.

b) good financial returns.

c) a coordinated plan.

d) integration into the company’s strategy.

e) all of the above.

 

Question 9

 

Effective capacity is:

 

a) the capacity a firm expects to achieve, given the current operating constraints.

b) the percentage of design capacity actually achieved.

c) the percentage of capacity actually achieved.

d) actual output.

e) efficiency.

 

Question 10

 

System capacity is based on:

 

a) the bottleneck.

b) throughput time.

c) time of the fastest station.

d) throughput time plus waiting time.

e) none of the above.

 

Question 11

 

The break-even point is:

 

a) adding processes to meet the point of changing product demands.

b) improving processes to increase throughput.

c) the point in dollars or units at which cost equals revenue.

d) adding or removing capacity to meet demand.

e) the total cost of a process alternative.

 

 

Question 12

 

Expected monetary value is most appropriate:

 

a) when the payoffs are equal.

b) when the probability of each decision alternative is known.

c) when probabilities are the same.

d) when both revenue and cost are known.

e) when probabilities of each state of nature are known.

 

Question 13

 

The net present value:

 

a) is greater if cash receipts occur later rather than earlier.

b) is greater if cash receipts occur earlier rather than later.

c) is revenue minus fixed cost.

d) is preferred over break-even analysis.

e) is greater if $100 monthly payments are received in a

lump sum ($1,200) at the end of the year.

 

Question 14

 

In a product structure diagram:

 

a) parents are found only at the top level of the diagram.

b) parents are found at every level in the diagram.

c) children are found at every level of the diagram except

the top level.

d) all items in the diagrams are both parents and children.

e) all of the above.

 

Question 15

 

The difference between a gross material requirement plan (gross MRP) and a net material requirements plan (net MRP) is:

 

a) the gross MRP may not be computerized, but the net MRP must be computerized.

b) the gross MRP includes consideration of the inventory on hand, whereas the net MRP doesn’t include the inventory consideration.

c) the net MRP includes consideration of the inventory on hand, whereas the gross MRP doesn’t include the inventory consideration.

d) the gross MRP doesn’t take taxes into account, whereas the net MRP includes the tax considerations.

e) the net MRP is only an estimate, whereas the gross MRP is used for actual production scheduling.

 

Question 16

 

Net requirements =

 

a) Gross requirements + Allocations − On-hand inventory + Scheduled receipts.

b) Gross requirements − Allocations − On-hand inventory − Scheduled receipts.

c) Gross requirements − Allocations − On-hand inventory + Scheduled receipts.

d) Gross requirements + Allocations − On-hand inventory − Scheduled receipts.

 

 

 

 

 

 

 

Question 17

 

A lot-sizing procedure that orders on a predetermined time interval with the order quantity equal to the total of the interval’s requirement is:

 

a) periodic order quantity.

b) part period balancing.

c) economic order quantity.

d) all of the above.

 

Question 18

 

MRP II stands for:

 

a) material resource planning.

b) management requirements planning.

c) management resource planning.

d) material revenue planning.

e) material risk planning.

 

Question 19

 

The two most basic inventory questions answered by the typical inventory model are:

 

a) timing of orders and order quantity.

b) ordering cost and carrying cost.

c) order quantity and cost of orders.

d) timing of orders and cost of orders.

e) order quantity and service level

 

Question 20

 

The sign at the bank that reads, "Wait here for the first available teller," suggests the use of a ________ waiting line system.

 

a) dynamic-server, single-phase

b) multiple-server, single-phase

c) single-server, multiphase

d) random-server, single-phase

e) multiple-server, multiphase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Part B

 

 

Solve all four problems 1-4 in Part B. Each problem is worth 15 marks.

 

 

Problem 1

 

The annual demand for notebook binders at Meyer’s Stationery Shop is 10000 units. Brad Meyer operates his business 300 days per year and finds that deliveries from his

supplier generally take 5 working days.

 

Required:

 

Calculate the reorder point for the notebook binders.

 

 

 

 

 

 

 

Problem 2

 

John has been asked to determine whether the $22.50 cost of tickets for the community dinner theater will allow the group to achieve break-even and whether the 175 seating capacity is adequate. The cost for each performance of a 10-performance run is $2,500.

 

The facility rental cost for the entire 10 performances is $10,000. Drinks and parking are extra charges and have their own price and variable costs, as shown below:

 

1	2	3	4	5	6	7	8	9
	Selling Price (P)	Variable Cost (V)	Percent Variable Cost (V/P)	Contribution 1- (V/P)	Sales Units	Dollar Sales (Sales x P)	Percent of sales	Contribution Weighted By Precent Sales (Col 5 x Col 8)
Tickets	$22.50	$10.50	0.467	0.533	175	$3938	0.741	0.395
Drinks	$5.00	$1.75	0.350	0.650	175	$875	0.165	0.107
Parking	$5.00	$2.00	0.400	0.600	100	$500	0.094	0.056
Total					450	$5313	1.000	0.558

 

1 2 3 4 5 6 7 8 9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Problem 3

 

Answer each of the following questions:

 

• List the characteristics of a waiting line system.

 

 

 

 

 

 

 

 

 

 

• List the factors used to measure the performance of a queuing system.

 

 

 

 

 

 

 

 

• The following notations are part of the terminology used in the waiting lines theory. Explain the meaning of each one of the following notations:

 

1. M/M/1

 

 

 

 

 

 

2. M/M/S

 

 

 

 

 

 

 

3. M/D/1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Problem 4

 

1. List the requirements of an effective use of an inventory with a dependent demand.
2. What do we call the list of components, ingredients, and materials needed to

make a product?

3. What are the modules in ERP?