SCMngmt- Test 2

Hand tools, lubricants, and cleaning supplies are usually examples of what?

MRO Inventory

Finished goods in transit are example of?

Transportation inventory

If demand is heavily seasonal, which INVENTORY FUNCTION allows the company to maintain level production?

anticipation inventory

Which inventory function is used for protect against possible strikes or potential price increases or some other event that may occur in the future?

speculative inventory

Our company orders a truck load quantity of an item from a supplier. Most of the truckload will not be used right away. The name for this material that won’t be used right away is

lot-size inventory

What is the formula for INVENTORY TURNOVER?

annual COGS/ ave inventory in dollars

If a company carries 20 WEEKS OF SUPPLY, what is the INVENTORY TURNOVER?

52/20= 2.6

In a periodic review inventory system, how many units are ordered?

Target inventory level – on hand balance

The EOQ seeks to minimize____ and ____.

Order costs and holding cost

If the EOQ is ordered, which of the following is true?

annual ordering costs=annual holding cost

An inventory system that constantly tracks the amount of inventory on hand, rather than checking stock oncer per period, is a ____ system.

perpetual… or re-order point

Compared to a reorder point model, a periodic review quantity requires___ safety stock___ checks of inventory on hand

more, fewer

Consider a periodic review inventory system with a lead time of two weeks and a review period of seven weeks. If the standard deviation of demand per week is 200 and the desired cycle-service level is 86%, what should the safety stock equal?


The ranking in ABC inventory analysis is based on what?

annual dollar usage

Which of the following statements is true?

Periodic counting generally counts every item in stock, whereas cycle counting generally does not

The inventory objective of customer service is measured by any of the following except _____

weeks of supply

Regarding inventory turnover,

Fewer weeks of supply on hand means greater inventory turnover

In Lot-for-lot ordering you order

exactly the quantity you need

For a re-order point (continuous review) system, 95% order-cycle service level, and standard deviation of replenishment lead time of 200 units, how many units of safety stock should be held?


In a reorder point system, the reorder point is 140. Demand during lead time is 110. Therefore safety stock must be


Which of the following 4 items is most likely to be classified as an C item in an ABC analysis?

annual usage unit cost
widget 20 80
thingamajig 45 60
whatchamacallit 50 250
dohickey 90 200


Replenishment lead time for a material is 1 week. The order interval is 3 weeks. Demand per week averages 25 with a standard deviation of 6. Management has set the target in stock rate at 99% What is the target inventory level if a periodic review system is used?


TI= d(RP+L) + SS

A healthcare clinic, has 3 departments. Travel distance between department A and B is 150 feet; between A and C is 200 feet; between B and C is 300 Feet. The estimated number of trips per day (for staff and patients) between departments is: 1000 from A to B; 2000 from A to C; and 3000 from B to C. What is the total load-distance in the facility under the current layout


What is the correct order of steps when for Systematic Layout Planning using a REL chart?

I Identify how important it is for each department to be close to every other department
II Using a schematic of the current or proposed layout, connect the departments using lines
III Put the importance information in a matrix


A facility consists of 3 departments: A, B and C. They are located in a row: A next to B, B next to C. Trips between departments are: A&B 15, A&C 20, B&C 10. What is the load-distance (LD) score for this facility as it is currently laid out


A facility consists of 3 departments: A, B and C. They are located in a row: A next to B, B next to C. Trips between departments are: A&B 15, A&C 20, B&C 10. Which of the following is true

Swapping the location of departments B and A (so that B is next to A and A is next to C) is a better layout than the current layout because it changes the load distance score to 55

Once capacity decisions have been made,

it is difficult to change them in the short term

Design capacity is usually _____ effective capacity

more than


How well available capacity is being used

“When producing more, will result in an increase in per unit costs” is a situation refrerred to as

Diseconomies of scale

A student union just replaced a large cafeteria with food court containing a number of small specialty storefronts (a pizza place, a taco stand, a deli). This is an example of

Facility focus

In a commercial bakery, inputs are received in bulk, which results in low transportation costs per ton. Outputs (such as donuts) are perishable and require special handling during transport. We would expect this operation

to locate near customers

Your new customer, a company that owns two midsized hospitals, has asked you to open a distribution center(DC) to serve the hospitals. It has requested that you locate the DC in the location that minimizes transportation cost (truckload miles) from the DC to the hospitals. The hospitals are in Jonesville and Smithtown. On an X,Y coordinate Jonesvilles location is (350, 300) and Smithtown’s is (300, 300). The estimated number of monthly truckloads to Jonesville is 20. The estimated number of monthly truckloads to Smithtown is 30. What are the XY coordinates for the optimal DC location?

320, 300

See Location Analysis PowerPoint Slides on Center of Gravity Method

You have 3 stores: Jonesville, Smithtown and Franklin. You are considering opening a distribution center in Washington or Jefferson. The distance from each store to Washington is: Jonesville 10, Smithtown 20, Franklin 15.

The distance from each store to Jefferson is: Jonesville 10, Smithtown 10, Franklin 20.

The estimated truckloads that each store requires are: Jonesville 5, Smithtown 10, Franklin 5.

The best location is ____ with a load-distance score of ___

Jefferson 250

Factors that should be considered when developing sales and operations plans include:

Available capacity, Available cash, and Market share objectives

In a level aggregate plan ___ varies and ____ stays steady

Planned inventory, planned output

Which of the following would cause a company to pursue a CHASE aggregate planning approach?
I. High recruiting and training costs
II. Highly skilled labor force
III. Low customers’ switching costs


Capacity based options for aggregate planning include all of the following EXCEPT

Building inventory ahead of planned demand

Which of the following would cause a company to pursue a LEVEL aggregate planning approach?
I. High Recruiting and training costs
II. High costs of idling and restarting equipment
III. High risk of inventory going obsolete quickly

I and III

Differences between and aggregate plan and a master schedule include which of the following?

An aggregate plan looks further into the future than a master schedule

Using price discounts to encourage customers to buy during off-peak periods is an example of?

Demand shifting

A hybrid aggregate plan

uses a combination of level and chase approaches

Which forecasting method assumes that next period’s forecast is equal to this period’s actual value?


Which forecasting method would most likely seek to develop a consensus among group of experts?


What are the two categories of quantitative models?

Causal and time series

A firm has the following order history over the last 6 months:
January 120
February 95
March 75
April 75
May 150
June 100

What would be a 4-month simple moving average forecast for July?



A firm has the following order history over the last 6 months.
January 75
February 90
March 135
April 80
May 115
June 110

What would be a 3-month weighted moving average forecast for July, using weights of 40% for the most recent month, 30% for the month preceding the most recent month, and 30% for the month preceding that one?


Which of the following is the LEAST useful sales forecasting model to use when sales are increasing?

8 week simple moving average

Suppose that you are using a four-period simple moving average to forecast sales. Actual sales have been decreasing by 10% every period. How will your forecasts perform?

Forecasts will be higher than actual

In exponential smoothing, what values can the smoothing constant (alpha)have?

[0, 1]

In exponential smoothing, which of the following values for alpha would generate the most stable forecast — one that is not very reactive to trends or sudden shifts in demand?


(smaller the better)

Suppose that Sally’s company uses exponential smoothing to make forecasts. Further suppose that last period’s demand forecast was for 19,000 units, and actual demand was 22,000 units. Sally’s company uses a smoothing constant (alpha) equal to 40%. What should be the forecast for this period?


Joe’s Equipment Distributors sells “Low and Loud” brand lawnmowers.

1999 2000
Fall 50 80
Winter 150 450
Spring 500 600
Summer 400 490

What is the average seasonal index for fall? Since the regression slope and intercept are not given, use the method in the text to answer this question.


Which of the following is a CAUSAL forecasting method?

linear regression

You have 2 years of quarterly historical demand data for a service. The data begin in Spring 2010. You run a trend line on this data using Microsoft Excel. This analysis shows that the trend is 220 and the intercept is 5,200. Based on this info, how much do we expect sales to change each quarter?

increase by 220

Quarterly average seasonal indexes for flim-flams are spring 0.9, summer 1.1, fall 1.3, winter 0.7

Flim-flams are more likely to be used forcutting grass than for shoveling snow

What value of the correlation coefficient implies that there is a perfect positive linear relationship between the two variables?


An r squared of 0.975 implies what?

97.5% of the variability in one variable is explained by the other variable

Which of the following values of the correlation coefficient implies that the value of sales (the dependent variable) decreases as the value of a predictor variable increases ?


You run a regression line (using Excel) on historical quarterly sales data that begin in Spring 2005. This analysis shows that the trend is -30 and the intercept is 2500. Thus we know that:

On average, the present quarter’s sales are 30units higher than sales in the quarter that follows it

What is the mean absolute deviation (MAD) of the following forecasts?

Month Actual Sales Forecast
January 55 60
February 40 48
March 45 35
April 40 30


Why is a TRACKING SIGNAL used?

To identify forecast bias

For the following three month of data, compute the tracking signal:

Period Forecast Actual
1 1020 1050
2 1075 1175
3 1000 895


period fcst actual error RSFE Cum abs dev mad Trk Signal

1 1020 1050 30 30 30

2 1075 1175 100 130 130

3 1000 895 -105 25 235 78.3 0.32

You are going to buy a ski jacket. In order fo you to even CONSIDER buying a particular jacket, it must have a waterproof breathable shell. After you assemble a list of jackets with this type of shell, you will buy the jacket that has the lowest price. In this case:

Price is an order winner

What are elements of operations strategy

I. Simplicity of workflow
II. Level of Automation
III. Employee Discretion

Low cost products are best achieved with a ______ operations strategy.


Frequent new product introductions are best achieved with an _______ operations strategy.


Compared to a stock broker, a mutual fund is a good example of a ________


An assemble to order strategy

produces standard components that can later be combined to customer specifications

Which of the following COMPETITIVE PRIORITIES always requires the use of general-purpose equipment?


Highly-skilled hourly workers would be MOST needed by companies employing which of the following COMPETITIVE PRIORITIES?


Which of the following are true of “product layouts”
I. Resources are usually grouped in the order in which they are used
II. Resources are typically grouped by the end item that they produce
III. Product layouts are associated with jumbled work flows

I and II

Companies that compete on cost generally

invest in automation

process layouts