Review Questions (Chapters 1,2,3,4 and 5)

OMS413 Review Questions (Chapters 1,2,3,4 and 5)

Part I. Concept.

1. All of the following items should be forecasted a. cycle stock EXCEPT b. safety stock a. Spare service parts c. anticipation stock b. Maintenance requirements for equipment d. pipeline stock c. Finished-good demands at the retail location d. Components of a finished good 8. Which of the following is NOT an assumption of basic EOQ model? 2. Which of the following will generally give a more a. Demand is known and constant accurate forecast? b. Whole lots ordering a. Shorter periods c. Item dependence b. Smaller geographic units d. Certainty in lead time and demand c. Detailed product levels e. None of the above d. Nearer time periods

3. The responsiveness of a moving average forecast 9. Which one of the following statements concerning to a step or ramp change would be improved if the economic order quantity (EOQ) is TRUE? a. The number of periods were increased a. The EOQ is the order quantity that minimizes b. The weight of the most recent observation were annual inventory holding costs. decreased b. And increase in demand will increase the c. The number of periods were decreased EOQ value. d. The weight of the earliest observations were c. The time between orders (TBO) is directly increased proportional to the annual demand for a given EOQ value. 4. Which of the following correctly identifies the type d. The EOQ formula assumes that there are only of forecasting method with the movement of the three relevant costs: holding, stockout, and data? ordering. a. The simple moving average is a good technique to level data 10. Sensitivity analysis on the economic order b. The trend enhanced method is good for seasonal quantity (EOQ) formula can help the operations data manager answer several questions on how to c. Regression is most appropriate for seasonal data manage inventories. Which one of the following d. Indexing would be used with level data questions is NOT answered by EOQ sensitivity analysis? 5. Available-to-promise is a. How critical are errors in estimating demand, a. The uncommitted portion of inventory or inventory holding cost, and ordering? production b. What should happen to lot sizes if interest b. The amount of the forecast which is consumed rates drop? by orders c. What should happen to cycle inventory if the c. Expedited and repromised customer orders demand rate increases? d. Safety stock for preferred customer d. What should happen to lot sizes if supple and lead-time uncertainty increase? 6. The projected available balance represents a. The uncommitted portion of inventory b. Either cumulative or per-period data c. An inventory balance projected into the future d. Production lead times

11. The practice of reducing the forecast by actual customer orders is known as 7. Which of the following inventory is created by the time spent to move and produce materials? a. available-to-promise a. The sample must be representative. b. order integration b. The purpose of the forecast must be c. demand commitment adequately defined. d. forecast consumption c. The data must be derived from the correct sources. 12. Customer order backlog is defined as all d. The form of the data must be suitable for compilation. a. overdue orders b. received orders not yet acknowledged 18. Which of the following is a true statement about c. received orders not yet shipped the sales and operations planning process? d. received orders with a promise date later than the date requested by the customer a. Consensus by management is not necessary. b. The production plan is the agreed upon plan. 13. The length of a forecast horizon is determined c. Forecasts of future demand are best expressed primarily by the in units. d. The supply plan does not include inventory. a. delivery time allowed by the customer b. length of the manufacturing cycle 19. Which of the following about ERP is NOT true? c. purpose of the forecast d. longest component lead time a. ERP represents a comprehensive information technology approach that 14. Which of the following factors would be LEAST brings all of an organization’s useful in determining the sales and operations information together plan time horizon? b. ERP is modular in structure c. ERP and MRP II are very similar in a. order backlog functionality b. business plan d. Top management commitment is c. cumulative lead time required of a successful ERP d. capacity acquisition lead time implementation e. None of the above 15. The result of single exponential smoothing is most like which of the following:

a. linear programming b. moving average c. seasonal index technique d. data decomposition

16. Starting inventory = 1300 Forecasted demand = 1600 Desired ending inventory = 1000

Based on the information above for a make-to- stock company, the production plan is a. 1900 b. 1700 c. 1600 d. 1300

17. In designing a forecasting system, which of the following is the primary consideration?