Question: At what point in a stock control graph is the EOQ found?
Answer Options: Where total cost equals holding cost Where total cost equals ordering cost Where ordering cost equals safety stock Where holding cost equals ordering cost
Answer: Where holding cost equals ordering cost
Question: How do managers assess, or control, a project?
Answer Options: They work with an assistant who checks the progress of each process and phase. They use a software product that allows anyone working on the project to modify processes. They employ a monitoring system for a project so that progress can easily be assessed. They recruit an independent reviewer to assess the project’s progress and processes.
Answer: They employ a monitoring system for a project so that progress can easily be assessed.
Question: Which of the following best describes how to apply project management to a project?
Answer Options: Include resources beyond those that are currently available so that future planning is considered. Use an open-ended completion date to allow for flexibility. Make sure the project is self-contained and involves a set of related activities. Make sure the project contains only a set of routine, simple activities.
Answer: Make sure the project is self-contained and involves a set of related activities.
Question: Which of the following is used to represent activity in a network diagram?
Answer Options: A solid line A diamond A circle A square
Answer: A solid line
Question: Relative to holding costs (Ch), which of the following is an effective and efficient stock control decision?
Answer Options: A. Ordering in small amounts to keep holding costs at a bare minimum B. Ordering in large amounts so that the annual cost of holding stock lowers the ordering cost C. Negotiating warehouse space on an ongoing basis to accommodate stock fluctuations D. Monitoring stock so that a new order arrives on the day the last item is sold
Answer: D. Monitoring stock so that a new order arrives on the day the last item is sold
Question: What is another common name for the Pareto classification of stock items?
Answer Options: A. Materials Requirements Planning (MRP) B. ABC classification of stock items (ABC analysis) C. Just-in-Time (JIT) management D. Economic Order Quantity (EOQ) analysis
Answer: B. ABC classification of stock items (ABC analysis)
Question: Which of the following decisions best describes an organization’s stock control problem?
Answer Options: A. Whether to maintain stock of an item with low sales volume B. Whether to buy back common stock to increase the organization’s equity ratio C. How much to order in each time period to meet product demand D. How to determine a safety stock level
Answer: C. How much to order in each time period to meet product demand
Question: Which of the following stock control costs occurs whenever a stock directive is generated?
Answer Options: A. Stockout B. Holding C. Order D. Purchase
Answer: C. Order
Question: Which of the following stock control costs represents the actual cost of acquiring a stock item from a supplier?
Answer Options: A. Stockout B. Holding C. Order D. Purchase
Answer: D. Purchase
Question: Which of the following is an assumption of the Economic Order Quantity (EOQ)?
Answer Options: A. Demand is constant over time. B. Demand is unknown. C. Costs are variable. D. Order quantity varies over time.
Answer: A. Demand is constant over time.
Question: According to the Economic Order Quantity (EOQ) model for stock control, how is the number of orders (N) within a cycle calculated?
Answer Options: A. N = Demand / EOQ B. N = Total Cost / EOQ C. N = EOQ / Quantity D. N = Quantity / EOQ
Answer: A. N = Demand / EOQ
Question: Assume an annual demand (D) for an item is 100 units. The cost of placing an order (Co) is $50. What is the annual cost if the organization orders a quantity (Q) of 10 units?
Answer Options: A. $250 B. $500 C. $1,050 D. $1,500
Answer: B. $500
Question: Assume that demand (D) is 5,000 units, ordering costs (Co) are $125, and holding costs (Ch) are $20. Based on the classical model for stock control, what would the optimal ordering amount in units be?
Answer Options: A. 100 B. 250 C. 1,075 D. 5,000
Answer: B. 250
Question: Assume that demand (D) is 500 units, ordering costs (Co) are $15, holding costs (Ch) are $20, and unit price (P) is $250. Based on the EOQ model for stock control, what would the economic order quantity be?
Answer Options: A. 17.31 B. 18.34 C. 27.39 D. 40.82
Answer: C. 27.39
Question: A floral shop sells 500 stems daily, and its supplier takes three days to deliver the next order of flowers. What stem level should the manager maintain to avoid a stock-out?
Answer Options: A. 300 B. 1,000 C. 1,500 D. 3,500
Answer: C. 1,500