6 Written Questions

1. the probability of not running out of stock during the lead time
2. when the quantity on hand of an item drops to this amount, the item is reordered
3. lead time
4. summing the weighted payoffs for each alternative and selecting the alternative with the highest epected value
5. average demand rate
6. order quantity

6 Multiple Choice Questions

1. annual demand
   1. D
   2. P
   3. z
   4. H
2. agreement between buyer and seller whereby the buyer agrees to buy a certain quantity of goods within a specified time period at a mutually agreeable price; and the goods are delivered as needed to the buyer
   1. Safety Stock
   2. Service Level
   3. Blanket Order
   4. Reorder Point
3. demand rate
   1. z
   2. H
   3. Q
   4. d
4. stock that is held is excess of the expected demand due to variable demand rate and or lead time
   1. Safety Stock
   2. LT
   3. Blanket Order
   4. -
      d
5. Annual carrying cost per unit
   1. H
   2. Q
   3. D
   4. P
6. purchase price per unit
   1. P
   2. z
   3. H
   4. S

6 True/False Questions

1. z → Annual carrying cost per unit

   True        False

2. S → Order cost per order

   True        False

3. inventory turnover → ratio of average cost of

   True        False

4. EVPI → purchase price per unit

   True        False

5. Economic Order quantity → when the quantity on hand of an item drops to this amount, the item is reordered

   True        False

6. objective of inventory control → to support the desired level of customer service while keeping inventory costs within reasonable limits

   True        False