Operations management stevenson 11th edition test bank ch13

ch13 Student: _ One important use of inventories in manufacturing is to decouple operations through the use of work in process inventories True False The objective of inventory management is to minimize the cost of holding inventory True False A retail store that carries twice the inventory as its competitor will provide twice the customer service level True False The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable True False The two main concerns of inventory control relate to the costs and the level of customer service True False To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: the timing and size of orders True False In the EOQ formula, holding costs under 10% are expressed as percentages, above 10% are expressed as annual unit costs True False DVD recorders would be an example of independent demand items True False Reorder point models are primarily used for dependent demand items True False 10 An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier True False 11 Decoupling operations applies to the railroad industry True False 12 Interest, insurance, and opportunity costs are all associated with holding costs True False 13 The A-B-C approach involves classifying inventory items by unit cost, with expensive items classified as ‘A' items and low cost items classified as ‘C' items True False 14 An inventory buffer adds value and lowers cost in all supply chains True False 15 In the A-B-C approach, C items typically represent about 15 percent of the number of items, but 60 percent of the dollar usage True False 16 EOQ inventory models are basically concerned with the timing of orders True False 17 The average inventory level is inversely related to order size True False 18 The average inventory level and the number of orders per year are inversely related: As one increases, the other decreases True False 19 The EOQ should be regarded as an approximate quantity rather than an exact quantity Thus, rounding the calculated value is acceptable True False 20 Carrying cost is a function of order size; the larger the order, the higher the inventory carrying cost True False 21 Understocking an inventory item is a sure sign of inadequate inventory control True False 22 Annual ordering cost is inversely related to order size True False 23 The total cost curve is relatively flat near the EOQ True False 24 Because price isn't a factor in the EOQ formula, quantity discounts won't affect EOQ calculations True False 25 In the quantity discount model, if holding costs are given as a percentage of unit price, a graph of the total cost curves will have the same EOQ for each curve True False 26 In the quantity discount model, the optimum quantity will always be found on the lowest total cost curve True False 27 ROP models indicate to managers the time between orders True False 28 When to order can be calculated by the ROP and expressed as a quantity True False 29 The rate of demand is an important factor in determining the ROP True False 30 The inventory value of the supply chain exceeds the inventory value of the organization's work in process inventory True False 31 Safety stock is held because we anticipate future demand True False 32 Variability in demand and/or lead time can be compensated for by safety stock True False 33 Solving quality problems can lead to lower inventory levels True False 34 ROP models assume that demand during lead time is composed of a series of dependent daily demands True False 35 Profit margins tend to be inversely related to inventory turns True False 36 In the fixed-order interval model, the order size is the same for each order True False 37 The fixed-order interval model requires a continuous monitoring of inventory levels True False 38 Discrete stocking levels are used when an organization doesn't want visibility of inventory levels True False 39 The fixed-order interval model requires a larger amount of safety stock than the ROP model for the same risk of a stockout True False 40 The single-period model can be very helpful in determining when to order True False 41 The single-period model can be very helpful in determining how much to order True False 42 Monitoring inventory turns over time can be used as a measure of performance True False 43 A single-period model would be used mainly by organizations going out of business True False 44 The basic EOQ model ignores the purchasing cost True False 45 When the item is offered for resale, shortage costs in the single-period model can include a charge for loss of customer goodwill True False 46 In the single-period model, the service level is the probability that demand will not exceed the stocking level in any period True False 47 A quantity discount will lower the reorder point True False 48 It is critical that the exact quantity calculated in the EOQ model be ordered True False 49 Safety stock eliminates all stock outs True False 50 The calculation of safety stock requires knowledge of demand and lead time variability True False 51 The two basic issues in inventory are how much to order and when to order True False 52 Cycle counting can be used in motorcycle inventory control True False 53 Using the EOQ model, the higher an item's carrying costs, the more frequently it will be ordered True False 54 The cycle time represents the time between reorder point and receipt of order True False 55 The cost of placing an order is a function of order size True False 56 All stock outs must be avoided True False 57 In the basic EOQ model, annual holding cost is one-half of the total annual cost for all items purchased True False 58 Quantity discounts are generally given for large number of orders True False 59 The larger the number of orders placed, the larger the average level of inventory True False 60 Which of the following is not one of the assumptions of the basic EOQ model? A Annual demand requirements are known and constant B Lead time does not vary C Each order is received in a single delivery D Quantity discounts are available E All of the above are necessary assumptions 61 Which of the following interactions with vendors would potentially lead to inventory reductions? A reduce lead times B increase safety stock C less frequent purchases D larger batch quantities E longer order intervals 62 A non-linear cost related to order size is the cost of: A interest B insurance C taxes D receiving E space 63 In a two-bin inventory system, the amount contained in the second bin is equal to the: A ROP B EOQ C amount in the first bin D optimum stocking level E safety stock 64 When carrying costs are stated as a percentage of unit price, the minimum points on the total cost curves: A Line up B Equal zero C Do not line up D Cannot be calculated E Depend on the percentage assigned 65 Dairy items, fresh fruit and newspapers are items that: A not require safety stocks B cannot be ordered in large quantities C are subject to deterioration and spoilage D require that prices be lowered every two days E have minimal holding costs 66 Which of the following is least likely to be included in order costs? A processing vendor invoices for payment B moving delivered goods to temporary storage C inspecting incoming goods for quantity D taking an inventory to determine how much is needed E temporary storage of delivered goods 67 In an A-B-C system, the typical percentage of the number of items in inventory for A items is about: A 10 B 30 C 50 D 70 E 90 68 In the A-B-C classification system, items which account for fifteen percent of the total dollar-volume for a majority of the inventory items would be classified as: A A items B B items C C items D A items plus B items E B items plus C items 69 In the A-B-C classification system, items which account for sixty percent of the total dollar-volume for few inventory items would be classified as: A A items B B items C C items D A items plus B items E B items plus C items 70 The purpose of "cycle counting" is to: A count all the items in inventory B count bicycles and motorcycles in inventory C reduce discrepancies between inventory records and actual D reduce theft E count 10% of the items each month 71 The EOQ model is most relevant for which one of the following? A ordering items with dependent demand B determination of safety stock C ordering perishable items D determining fixed interval order quantities E determining fixed order quantities 72 Which is not a true assumption in the EOQ model? A Production rate is constant B Lead time doesn't vary C No more than items are involved D Usage rate is constant E No quantity discounts 73 In a supermarket, a vendor's restocking the shelves every Monday morning is an example of: A safety stock replenishment B economic order quantities C reorder points D fixed order interval E blanket ordering 74 A cycle count program will usually require that ‘A' items be counted: A daily B once a week C monthly D quarterly E more frequently than annually 75 A risk avoider would want safety stock A Less B More C The same D Zero E 50% 76 In the basic EOQ model, if annual demand doubles, the effect on the EOQ is: A It doubles B It is four times its previous amount C It is half its previous amount D It is about 70 percent of its previous amount E It increases by about 40 percent 133 If she were to order 80 pounds of pepperoni at a time, what would be the length of an order cycle? A days B 0.25 days C days D days E days Divide the order quantity by the demand rate AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #133 Topic Area: How Much to Order: Economic Order Quantity Models 134 If she were to order 80 pounds of pepperoni at a time, what would be the average inventory level? A 20 pounds B 40 pounds C 60 pounds D 80 pounds E 100 pounds Divide the order quantity by two AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #134 Topic Area: How Much to Order: Economic Order Quantity Models 135 If she were to order 80 pounds of pepperoni at a time, what would be the total daily costs, including the cost of the pepperoni? A $60.00 B $63.20 C $64.00 D $64.10 E $65.00 Add the holding cost to the ordering cost and the cost of the pepperoni AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #135 Topic Area: How Much to Order: Economic Order Quantity Models 136 What is the economic order quantity for pepperoni? A 20 pounds B 40 pounds C 60 pounds D 80 pounds E 100 pounds Use the basic EOQ formula AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #136 Topic Area: How Much to Order: Economic Order Quantity Models The Operations Manager for Shadyside Savings & Loan orders cash from her home office for her very popular "BIG BUCKS" automated teller machine, which only dispenses $100 bills She estimates that this machine dispenses an average of 12,500 bills per month, and that carrying a bill in inventory costs 10 percent of its value annually She knows that each order for these bills costs $300 for clerical and armored car delivery costs, and that order lead time is six days Stevenson - Chapter 13 137 Assuming a thirty-day month, at what point should bills be reordered? A bills remaining B 417 bills remaining C 2,500 bills remaining D 10,000 bills remaining E 12,500 bills remaining Multiply the demand rate by the lead time AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-09 Describe reorder point models and solve typical problems Stevenson - Chapter 13 #137 Topic Area: Reorder Point Ordering 138 Assuming a thirty-day month, if she were to order 6,000 bills at a time, what would be the length of an order cycle? A 0.48 days B 2.08 days C days D 8.4 days E 14.4 days Divide the order quantity by the demand rate AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #138 Topic Area: How Much to Order: Economic Order Quantity Models 139 If she were to order 6,000 bills at a time, what would be the dollar value of the average inventory level? A $3,000 B $6,000 C $12,500 D $300,000 E $600,000 Divide the order quantity by two AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #139 Topic Area: How Much to Order: Economic Order Quantity Models 140 If she were to order 6,000 bills at a time, what would be the average monthly total costs, EXCLUDING the value of the bills? A $625 B $1,250 C $2,500 D $3,125 E $37,500 Add the ordering and holding costs AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #140 Topic Area: How Much to Order: Economic Order Quantity Models 141 What is the economic order quantity? A 600 bills B 3,000 bills C 949 bills D 6,215 bills E 12,500 bills Use the basic EOQ formula AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #141 Topic Area: How Much to Order: Economic Order Quantity Models Given the following data for a particular inventory item: Stevenson - Chapter 13 142 What is the economic order quantity for this item? 2,000 units Feedback: Use the basic EOQ formula AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #142 Topic Area: How Much to Order: Economic Order Quantity Models 143 For the economic order quantity, what is the length of an order cycle? weeks Feedback: Divide the order quantity by the demand rate AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #143 Topic Area: How Much to Order: Economic Order Quantity Models 144 For the economic order quantity, what is the reorder point? 1,500 units Feedback: Multiply the lead time by the demand rate AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-09 Describe reorder point models and solve typical problems Stevenson - Chapter 13 #144 Topic Area: Reorder Point Ordering 145 For the economic order quantity, what is the average inventory level? 1,000 units Feedback: Divide the order quantity by two AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #145 Topic Area: How Much to Order: Economic Order Quantity Models 146 For the economic order quantity, what are average weekly ordering costs? $10 Feedback: Divide the demand rate by the order quantity, then multiply by per-order cost AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #146 Topic Area: How Much to Order: Economic Order Quantity Models 147 For the economic order quantity, what are average weekly carrying costs? $10 Feedback: Divide the order quantity by two, then multiply by the periodic holding cost AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #147 Topic Area: How Much to Order: Economic Order Quantity Models 148 For the economic order quantity, what are average weekly total costs, including the cost of the inventory item? $270 Feedback: Multiply the demand rate by the cost of the item, then add to the holding and ordering costs AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #148 Topic Area: How Much to Order: Economic Order Quantity Models The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four (4) days Stevenson - Chapter 13 149 At what point should resin be reordered? A kilograms remaining B 50 kilograms remaining C 200 kilograms remaining D 400 kilograms remaining E 500 kilograms remaining Multiply the demand rate by the lead time AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-09 Describe reorder point models and solve typical problems Stevenson - Chapter 13 #149 Topic Area: Reorder Point Ordering 150 If order size was 1,000 kilograms of resin, what would be the length of an order cycle? A 0.05 days B days C 16 days D 20 days E 50 days Divide the order quantity by the demand rate AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #150 Topic Area: How Much to Order: Economic Order Quantity Models 151 If the order size was 1,000 kilograms of resin, what would be the average inventory level? A 50 kilograms B 200 kilograms C 500 kilograms D 800 kilograms E 1,000 kilograms Divide the order quantity by two AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #151 Topic Area: How Much to Order: Economic Order Quantity Models 152 If the order size was 1,000 kilograms of resin, what would be the daily total inventory costs, EXCLUDING the cost of the resin? A $5 B $10 C $20 D $25 E $40 Multiply the average inventory by the holding cost AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #152 Topic Area: How Much to Order: Economic Order Quantity Models 153 What is the economic order quantity for resin? A 50 kilograms B 100 kilograms C 250 kilograms D 500 kilograms E 1,000 kilograms Use the basic EOQ formula AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems Stevenson - Chapter 13 #153 Topic Area: How Much to Order: Economic Order Quantity Models 154 A firm stocks a seasonal item that it buys for $22/unit and sells for $29 unit During the season, daily demand can be described using a Poisson distribution with a mean of 2.4 Because of the nature of the item, units remaining at the close of business each day must be removed at a cost of $2 each What is the optimum stocking level, and what is the effective service level? Cs = $29 - $22 = $7 Ce = $22 + $2 = $24 For a Poisson distributed variable with a mean of 2.4, this SL falls between the cumulative probabilities associated with levels of and unit Hence, stock unit Feedback: At that stocking level, the (effective) service level is 308 AACSB: Analytic Blooms: Apply Difficulty: Hard Learning Objective: 13-10 Describe situations in which the single period model would be appropriate; and solve typical problems Stevenson - Chapter 13 #154 Topic Area: The Single-Period Model 155 Joe's Coffee Shoppe has fresh doughnuts delivered each morning Daily demand for plain doughnuts is approximately normal with a mean of 200 and a standard deviation of 15 Joe pays $1.20 per dozen and has a standing order for 16 dozen Joe and the staff eat any leftovers What is the implied shortage cost? = 15 Ce = $1.20 per dozen The stocking level is 12(16) = 192, which implies a service level of 2981 If 2981 = and Ce $1.20 per dozen, solving for Cs leads to an estimated Cs of $.51 per dozen Feedback: Given the implied service level and the excess cost, solve for the implied shortage cost AACSB: Analytic Blooms: Apply Difficulty: Hard Learning Objective: 13-10 Describe situations in which the single period model would be appropriate; and solve typical problems Stevenson - Chapter 13 #155 Topic Area: The Single-Period Model 156 A restaurant prepares Peking Duck daily at a cost of $18 per duck Each duck generates revenue of $47 if sold Demand for Peking Duck can be described by a Poisson distribution with a mean of 4.2 ducks per day Unsold ducks at the end of each day are converted to duck soup at an additional cost of $5 over and above the resulting value as soup How many ducks should be prepared each day? SL = = 5577 For a Poisson distributed variable with a mean of 4.2, this SL falls between the cumulative probabilities associated with levels of and units Hence, stock four ducks Feedback: Stocking four ducks leads to an (effective) service level of 59 AACSB: Analytic Blooms: Apply Difficulty: Hard Learning Objective: 13-10 Describe situations in which the single period model would be appropriate; and solve typical problems Stevenson - Chapter 13 #156 Topic Area: The Single-Period Model 157 A machine is expected to use approximately three spare parts during its useful life The spares cost $200 each and have no salvage value or other use The manager has ordered five spares Assuming a Poisson usage rate, what range of shortage cost is implied? Ce = $200 Mean = (Poisson) Cs = ? Assuming a Poisson-distributed variable with a mean of 3, if stocking units is optimal, this implies that the optimal service level must be between 815 and 916 Thus, Solving for Cs yields a range of Cs from $881.08 to $2,180.95 Feedback: Solve for shortage cost that leads to a service level falling within the range (inclusive) of 0.815 and 0.916 AACSB: Analytic Blooms: Apply Difficulty: Hard Learning Objective: 13-10 Describe situations in which the single period model would be appropriate; and solve typical problems Stevenson - Chapter 13 #157 Topic Area: The Single-Period Model 158 A manager intends to order a new machine and must now decide on the number of spare parts to order along with the machine The parts cost $400 each and have no salvage value The manager has compiled a frequency distribution for the probable usage of spare parts, as shown For what range of shortage costs would stocking one spare part constitute an optimal decision? Number of Ce = $400 In order for a stocking level of one part to be optimal, the service level must fall in the range 08 to 38 (see frequency distribution) Thus, Setting the service level ratio equal to 08 yields Cs = $34.78 Setting the service level ratio equal to 38 yields Cs = $245.16 Hence the range of shortage costs for a stocking level of one to be optimal is $34.78 to $245.16 Feedback: Solve for shortage cost that leads to a service level falling within the range (inclusive) of 0.08 and 0.38 AACSB: Analytic Blooms: Apply Difficulty: Hard Learning Objective: 13-10 Describe situations in which the single period model would be appropriate; and solve typical problems Stevenson - Chapter 13 #158 Topic Area: The Single-Period Model The Corner Newsstand has demand for a certain weekly magazine that can be approximated by a Poisson distribution with a mean of 9.0 Magazines are purchased for $1.50 Stevenson - Chapter 13 159 If unsold copies can be returned for half credit and the owner stocks ten copies, what is the implied range of shortage cost? Ce = $.75 Given Poisson-distributed demand with a mean of 9.0, the optimum service level must be between 587 and 706 Service level of 587 implies Cs = $1.07 Service level of 706 implies Cs = $1.80 Thus the range of shortage costs implied by stocking ten copies is $1.07 to $1.80 Feedback: Solve for shortage cost that leads to a service level falling within the range (inclusive) of 0.587 and 0.706 AACSB: Analytic Blooms: Apply Difficulty: Hard Learning Objective: 13-10 Describe situations in which the single period model would be appropriate; and solve typical problems Stevenson - Chapter 13 #159 Topic Area: The Single-Period Model 160 If unsold copies must be destroyed and copies sell for $4.00 each, find the optimum stocking level Ce = $1.50 Cs = $4.00 - 1.50 = $2.50 Given Poisson-distributed demand with a mean of 9.0, this SL falls between and 10 units Thus, we would stock 10 copies Feedback: Compare the service level ratio to the cumulative distribution of demand with Poisson-distributed demand with a mean of 9.0 AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-10 Describe situations in which the single period model would be appropriate; and solve typical problems Stevenson - Chapter 13 #160 Topic Area: The Single-Period Model 161 If unsold copies can be returned for half credit and copies sell for $4.25 each, find the optimal stocking level Ce = $1.50/2 = $.75 Cs = $4.25 - 1.50 = $2.75 Given Poisson-distributed demand with a mean of 9.0, this SL falls between 10 and 11 units Stock 11 copies of each issue Feedback: Compare the service level ratio to the cumulative distribution of demand with Poisson-distributed demand with a mean of 9.0 AACSB: Analytic Blooms: Apply Difficulty: Medium Learning Objective: 13-10 Describe situations in which the single period model would be appropriate; and solve typical problems Stevenson - Chapter 13 #161 Topic Area: The Single-Period Model 162 Demand for a component averages 80 units per week, with a weekly standard deviation of demand of 14 units The current supplier of this component offers a four-week lead time Stockout risk is to be kept at 8% Assume that it costs $50 to hold one unit in inventory for a year Suppose the annual cost for the items would be $500 higher if they were purchased from another vendor, but that vendor would offer a two-week lead time Would it be better to go with the more-expensive but more-responsive vendor? Yes, using the second vendor would be cheaper overall Feedback: Required safety stock for the cheaper-but-slower vendor would be approximately 39 units Required safety stock for the more-expensive-but-faster vendor would be approximately 28 units The $550 reduction in annual holding costs would more than offset the greater expense in purchase costs AACSB: Analytic Blooms: Apply Difficulty: Hard Learning Objective: 13-09 Describe reorder point models and solve typical problems Stevenson - Chapter 13 #162 Topic Area: Reorder Point Ordering ch13 Summary Category # of Questi ons AACSB: Analytic 65 AACSB: Reflective Thinking 97 Blooms: Apply 65 Blooms: Remember 76 Blooms: Understand 21 Difficulty: Easy 24 Difficulty: Hard 41 Difficulty: Medium 97 Learning Objective: 13-01 Define the term inventory; list the major reasons for holding inventories; and list the main requirements f or effective inventory management 12 Learning Objective: 13-02 Discuss the nature and importance of service inventories Learning Objective: 13-03 Explain periodic and perpetual review systems Learning Objective: 13-04 Explain the objectives of inventory management 10 Learning Objective: 13-05 Describe the A-B-C approach and explain how it is useful Learning Objective: 13-06 Describe the basic EOQ model and its assumptions and solve typical problems 51 Learning Objective: 13-07 Describe the economic production quantity model and solve typical problems Learning Objective: 13-08 Describe the quantity discount model and solve typical problems 12 Learning Objective: 13-09 Describe reorder point models and solve typical problems 37 Learning Objective: 13-10 Describe situations in which the single period model would be appropriate; and solve typical problems 19 Learning Objective: 13-10 Describe situations in which the singleperiod model would be appropriate; and solve typical problems Stevenson - Chapter 13 169 Topic Area: How Much to Order: Economic Order Quantity Models 68 Topic Area: How Much to Order: Fixed-Order-Interval Model Topic Area: Introduction Topic Area: Inventory Ordering Policies Topic Area: Operations Strategy Topic Area: Reorder Point Ordering 36 Topic Area: Requirements for Effective Inventory Management 12 Topic Area: The Nature and Importance of Inventories 11 Topic Area: The Single-Period Model 19 ... external inventories D safety stock elimination E optimizing reorder points 100 An operations strategy for inventory management should work towards: A increasing lot sizes B decreasing lot sizes C... stocked, what is the probability of selling both of them? A .5 B .6 C .7 D .8 E none of these 99 The management of supply chain inventories focuses on: A internal inventories B external inventories... cost of moving goods to temporary storage after receipt from a supplier True False 11 Decoupling operations applies to the railroad industry True False 12 Interest, insurance, and opportunity costs