bozhan_tif_ch14.docxVIP

Chapter 14 Managing Inventory throughout the Supply Chain TRUE/FALSE Cycle stock can occur at more than one point in a supply chain. Answer: True Reference: The Role of Inventory Difficulty: Easy Keywords: cycle stock, supply chain Companies do not plan to use safety stock. Answer: True Reference: The Role of Inventory Difficulty: Easy Keywords: safety stock Dependent demand inventory never needs hedge inventory. Answer: False Reference: The Role of Inventory Difficulty: Easy Keywords: hedge inventory, dependent demand The order quantity in a periodic review system rises as the on-hand inventory falls. Answer: True Reference: Periodic Review Systems Difficulty: Easy Keywords: order quantity, periodic review, inventory AACSB: Analytic Skills The reorder point increases as the service level falls. Answer: False Reference: Periodic Review Systems Difficulty: Moderate Keywords: reorder point, service level AACSB: Analytic Skills A company that orders at their economic order quantity has an annual ordering cost that is half of their total cost. Answer: True Reference: Continuous Review Systems Difficulty: Moderate Keywords: EOQ, economic order quantity, ordering cost AACSB: Analytic Skills In order for the economic order quantity model to work, demand must be known and constant. Answer: True Reference: Continuous Review Systems Difficulty: Moderate Keywords: demand, EOQ, economic order quantity  Decreases in the standard deviation of demand reduce the amount of safety stock that should be held. Answer: True Reference: Continuous Review Systems Difficulty: Moderate Keywords: demand, safety stock In order to find the lowest cost ordering policy in a quantity discount model, you must compare the holding cost, ordering cost, and the cost of goods for various order quantities. Answer: True Reference: Continuous Review Systems Difficulty: Moderate Keywords: demand, EOQ, economic order quantity, quantity discount The excess cost of an item is the profit you would have made on