MGSC 395 Exam 3 Review Chapter 9 – Flashcards
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which of these statements is NOT required in order for the EOQ model to be a reasonable approach
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the setup/ordering cost must exceed the annual holding cost of one unit
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a reorder point will fall if
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the lead time falls
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a form of shrinkage called __________ occurs when inventory cannot be used or sold at full value, owing models changes, engineering modifications, or unexpectedly low demand
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obsolescence
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for class C SKUs, why is much looser inventory control appropriate
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the inventory holding cost of class C SKUs tends to be low
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a perpetual inventory system requires that
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inventory records are always current
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which of the following can put pressure on a company to carry small levels of inventory
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high cost of capital
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in a periodic review inventory system, the protection interval for the individual SKU is equal to
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the length of time between reviews of the SKU's inventory position plus the lead time of the SKU
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which of the following costs is NOT considered an inventory holding (or carrying) cost
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inventory transportation costs
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an individual item or product that has an identifying code and is held in inventory somewhere along the supply chain is called a
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stock-keeping unit
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the total cost for a continuous review system with uncertain demand excludes consideration of
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product cost
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Lisa's Card Cache uses ABC analysis. Which of the following statements is not true of ABC analysis
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ABC analysis allows the company to control the inventory shrinkage
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in ABC analysis, class A items usually represent _________ of the SKUs but account for _______ of the dollar usage
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20%, 80%
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which of the following is not considered a pressure to hold large inventories
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the cost of insurance
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for what percentage of the time will the condition of "no safety stock" adequately cover the demand for an item (assume demand during lead time is normally distributed)
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50%
