Test bank for operations management 11th edition by krajewski

Answer: TRUE Reference: Noninstantaneous Replenishment Difficulty: Moderate Keywords: noninstantaneous replenishment Learning Outcome: Compare the advantages and disadvantages of common

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Test Bank For Operations Management 11th Edition By Krajewski

Test Bank for all chapters, Supplements are included Download at :

Operations Management, 11e (Krajewski et al.)

Supplement C: Special Inventory Models

Keywords: noninstantaneous replenishment

Learning Outcome: Compare the advantages and disadvantages of common inventory systems

2) For analysis using the economic production lot size (ELS) model to be useful, the producer must be able to produce the item faster than it is consumed

Answer: TRUE

Reference: Noninstantaneous Replenishment

Difficulty: Moderate

Learning Outcome: Compare the advantages and disadvantages of common inventory systems AACSB: Analytical Thinking

3) Consider a noninstantaneous replenishment situation in which the production rate is 100 units per day, the demand rate is four units per day, and the economic production lot size is 500 units Which of the following statements is TRUE?

A) The average cycle inventory is fewer than 225 units

B) The average cycle inventory is greater than 300 units

C) The rate of buildup in cycle inventory during the production cycle is fewer than 100 units per day

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Answer: C

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Scenario C.1

Jerry Allison is in charge of production for a small producer of plumbing supplies The cricket model has an estimated annual demand of 12,000 units and can be produced at a production rate

of 90 units per day The company produces (and sells) the cricket 300 days per year Setup cost

to produce this model averages $22 and the item has a holding cost of $3 per unit per year 4) Use the information in Scenario C.1 What is the economic production lot size (ELS)?

A) fewer than or equal to 400 units

B) greater than 400 units but fewer than or equal to 480 units

C) greater than 480 units but fewer than or equal to 500 units

D) greater than 500 units

Answer: D

5) Use the information in Scenario C.1 How many production runs per year are needed if Jerry chooses to produce at his economic production lot size (ELS)?

A) fewer than or equal to 10 runs

B) greater than 10 runs but fewer than or equal to 20 runs

C) greater than 20 runs but fewer than or equal to 30 runs

D) greater than 30 runs

Answer: C

6) Use the information in Scenario C.1 If Jerry chooses to produce batches dictated by the economic production lot size (ELS) model, how many days elapse between the start of

consecutive production runs (what is the time between runs or TBO)?

A) fewer than or equal to 8 days

B) greater than 8 days but fewer than or equal to 10 days

C) greater than 10 days but fewer than or equal to 12 days

D) greater than 12 days

Answer: D

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7) Use the information in Scenario C.1 What is the maximum inventory if Jerry chooses to produce at the economic production lot size (ELS)?

Answer: B

8) Use the information in Scenario C.1 If Jerry chooses to produce the batch size suggested by the economic production lot size (ELS) model, what is the annual cost?

A) less than or equal to $900

B) greater than $900 but less than or equal to $950

C) greater than $950 but less than or equal to $1000

D) greater than $1000

Answer: B

9) Consider a manufacturer that uses the economic production lot size (ELS) model What must

be the relationship be between production rate and demand rate for the producer to spend double the time in the production and demand portion of the inventory cycle than they spend in only the demand portion of the inventory cycle?

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10) Consider a manufacturer that uses the economic production lot size (ELS) model What must

be the relationship be between production rate and demand rate for the producer to spend exactly the same time in the production and demand portion of the inventory cycle as they spend in only the demand portion of the inventory cycle?

11) The time between orders is given by the formula ELS/D What is the significance of its inverse, D/ELS?

A) the number of orders per year

B) the time between consuming an order

C) the ratio of demand only to production and demand cycles

D) the ratio of the maximum inventory to the production quantity

Answer: A

12) Consider a manufacturer that uses the economic production lot size (ELS) model What must the relationship be between production rate and demand rate for the producer to realize a

maximum inventory that is exactly two-thirds of their lot size?

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13) Warren's Ice Cream makes 4 different flavors of ice cream using their secret process and top secret recipes Each of their flavors is equally popular and experiences a demand of 5,000

gallons/year Warren's process is capable of producing 100 gallons/day once they incur the $25 setup cost The ice cream holding cost is 10% of the $5 per gallon price Warren's plant runs 250 days a year and stays busy doing so, but management feels they can add another flavor to their product line and increase their revenue Which of the following statements is appropriate for this scenario?

A) Warren's can comfortably add a fifth flavor without increasing the number of days they operate

B) Warren's cannot add the fifth flavor because the holding cost would increase

C) Warren's can add the fifth flavor only if there is zero setup time between flavors

D) Warren's cannot add the fifth flavor because demand would exceed capacity

Answer: C

Difficulty: Hard

14) In a noninstantaneous replenishment model, as the daily demand approaches the daily

production rate, the:

A) number of production runs per year decreases

B) length in days of a production run increases

C) economic lot size increases

D) time between production runs decreases

Answer: D

15) The is the optimal lot size in situations in which replenishment is not

instantaneous

Answer: economic production lot size, ELS

Learning Outcome: Compare the advantages and disadvantages of common inventory systems

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16) A manufacturer produces aluminum cans internally rather than purchasing them and uses the economic production lot size equation to govern this process The length of time that the

aluminum can batch runs is given by the equation and the time between the start of one batch of cans to the next is found by the equation

Answer: ELS/p, ELS/d

Difficulty: Hard

17) The pile of inventory accumulated in an economic production lot size situation is than the lot size dictated by the ELS calculation

Answer: smaller

Difficulty: Hard

18) In an economic production lot size situation, the production rate is always than the demand rate

Answer: greater

Learning Outcome: Compare the advantages and disadvantages of common inventory systems 19) In an economic production lot size situation, the producer is producing half the time if the ratio of production rate to demand rate is

Answer: 2:1

Difficulty: Hard

20) Briefly explain why the economic production lot size (ELS) is actually larger than the EOQ when there are noninstantaneous replenishments

Answer: The cycle inventory is less than Q/2, which reduces the annual holding cost of ordering

Q units Thus, a larger order quantity is justified

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21) Sketch the economic production lot size (ELS) graph of inventory level as a function of time and label all elements of the graph

Answer:

22) A production manager is making a decision on batch size for a product with an annual

demand of 25,000 units per year The setup cost for each batch is $45 and once the setup is complete, the product may be produced at the rate of 650 units per day There is a holding cost of

$2 per unit per year and the plant operates on a 250-day production year How big should the production batch be and how long (in days) will it take to produce the batch?

Answer:

Production time = = = 1.77 days

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23) Walter White must satisfy an annual demand of 50,000 pounds per year The setup cost for each batch is $6500 and once the setup is complete, the product may be produced at the rate of

1800 pounds per day There is a holding cost of $15 per unit per year and the plant operates on a 350-day production year How big should the production batch be and how long (in days) will it take to produce the batch?

Answer:

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24) Walter White must satisfy an annual demand of 50,000 pounds per year The setup cost for each batch is $6500 and once the setup is complete, the product may be produced at the rate of

1800 pounds per day There is a holding cost of $15 per unit per year and the plant operates on a 350-day production year Determine the relevant parameters and sketch the inventory cycle through two complete cycles, labeling all lines and vertices

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25) A production manager uses the economic lot size approach to determine the batch size for a product with an annual demand of 20,000 units per year The setup cost for each batch is $50 and once the setup is complete, the product may be produced at the rate of 800 units per day There is

a holding cost of $2 per unit per year and the plant operates on a 250-day production year If the machine used to produce this product is needed for another item and it takes one day to set up regardless of product, how many production days are available for production of the new item? Answer:

Time Between Orders = = = 13.175 days

Available time = 13.175 days - 1,3175 days - 2 × (1 day) = 9.8575 days per cycle

= 18.97 cycles/year ≈ 19 cycles/year

19 cycles/year × 9,8575 days/cycle = 187.29 days/year

Keywords: quantity discount

Learning Outcome: Compare the advantages and disadvantages of common inventory systems AACSB: Application of Knowledge

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2) A pencil supplier just introduced quantity discounts The price schedule follows

Order Quantity Price per Unit

Answer: C

Reference: Quantity Discounts

3) Which one of the following statements about quantity discounts is BEST?

A) The minimum cost point on each price curve is always feasible

B) A price break is the maximum quantity needed to get a discount

C) If the EOQ for the lowest price is feasible, this is the best lot size

D) Either price or quantity is sufficient for the search for the best lot size

Answer: C

Reference: Quantity Discounts

Learning Outcome: Compare the advantages and disadvantages of common inventory systems AACSB: Application of Knowledge

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