1. The basic purpose of supply chain management is to
a. create an exclusive set of suppliers who will not supply your competitors.
b. link your customers together so that the flow of materials remains under control.
c. synchronize the operations of all suppliers with those of purchasing, production, distribution, and customers.
d. reduce the inventory by proper selection of customers and transportation modes.
2. Which one of the following is TRUE for supply chain management?
a. Supply-chain concept applies to both manufacturing and service organizations.
b. Supply chain applies only to manufacturing because it deals with flow of materials.
c. Supply chain is about suppliers and does not include distributors or customers.
d. Supply chain includes any operation that deals with materials.
3. For improving the efficiency and productivity of a complex supply chain, a company should do which of the following?
a. Never adopt backward vertical integration.
b. Enter into agreements with first-tier suppliers, and let them manage their suppliers.
c. Adopt backward vertical integration or enter into agreements with first-tier suppliers.
d. Adopt backward vertical integration, but avoid writing agreements with first-tier suppliers.
4. Which one of the following statements is TRUE about purchasing?
a. Purchasing must satisfy the firm’s long-term supply needs.
b. Purchasing’s primary role should be placing and tracking orders.
c. Purchasing’s primary role is to negotiate lower prices.
d. Purchasing’s primary role is to negotiate prices and delivery dates.
5. Which one of the following statements regarding supplier selection criteria is TRUE?
a. Supplier should be selected on the basis of price only because the cost of materials is a significant portion of total product cost.
b. Supplier should be selected on the basis of quality, price, and delivery.
c. Supplier should be selected primarily on the basis of the shortest lead time because higher lead time increases the cost of inventory.
d. Supplier should be selected on the basis of quality because quality is always the most important characteristic of a product.
6. Which one of the following statements is TRUE about a cooperative orientation in supplier relationships?
a. It cannot be implemented in Western countries because competitive bidding is more effective in that culture.
b. It cannot be implemented in the Western countries because it always benefits the supplier.
c. It requires all parts and subassemblies to be purchased from the same supplier.
d. It requires few suppliers for each item or service.
d(Managing the Supplier Interface, moderate)
7. One of the benefits of a cooperative orientation in supplier relationships is
a. the buyer sometimes suggests ways to improve the supplier’s operations.
b. the supplier implements its own quality standards.
c. the buyer does not have to share much information with the supplier.
d. the supplier has complete freedom in choosing the delivery time.
8. Which one of the following statements is TRUE about a competitive orientation in supplier relationships?
a. It tends to emphasize short-term advantages over long-term commitments.
b. The supplier gains repeatability and can move toward a line flow process.
c. The supplier is obliged to offer the lowest possible price every time.
d. The supplier is obliged to deliver the material in the shortest possible time, every time.
9. Which one of the following statements is TRUE?
a. A buying firm should always adopt a competitive orientation for a standard item with high demand.
b. Single sourcing is always desirable for high demand items.
c. Long-term contracts are consistent with a cooperative orientation to supplier relationships.
d. The buyer always wins in a competitive orientation to supplier relationships.
10. Which one of the following statements correctly represents a benefit of centralized buying?
a. Local managers have more control over their business.
b. Purchases and production schedules are meshed more easily.
c. Purchasing lead times may be shorter.
d. Increased buying power can result in significant savings in purchasing costs.
11. Which one of the following statements on inventory placement of finished goods is best?
a. Forward placement might help reduce transportation cost.
b. Forward placement is consistent with a competitive priority that calls for customization.
c. Inventory pooling should be avoided when demand in various regions fluctuates month to month.
d. Backward placement is consistent with a competitive priority that calls for fast delivery times.
12. Some manufacturers and service providers want to measure the performance of supply chain by the percentage of on-time deliveries. The main reason for this measure is
a. it will discourage the competitors to enter the market.
b. it measures the satisfaction levels of suppliers.
c. increased on-time delivery increases revenue by inducing customers to buy more products from the firm.
d. It helps accounting to debit customer’s accounts promptly.
13. Which one of the following statements about the relation between financial and supply chain performance measures is TRUE?
a. Longer delivery times require higher levels of working capital.
b. Shorter new product development time decreases revenue.
c. Higher inventory turns call for higher working capital requirement.
d. Lower aggregate inventory value means higher current assets.
14. Efficient supply chain should be preferred when
a. product variety is high.
b. competitive priority is customization.
c. demand is highly predictable.
d. demand is unpredictable.
15. The type of goods for which efficient supply chain is appropriate is
a. high product cost.
b. frequent design changes.
c. high contribution margin.
d. standardized products.
16. Responsive supply chains should be preferred when
a. product variety is low.
b. demand is predictable.
c. contribution margins are low.
d. product variety is high.
17. The type of goods for which a responsive supply chain is appropriate are
a. fashion goods.
b. products with a long shelf life.
c. expensive products.
d. those with infrequent design changes.
18. A firm in the higher echelon of an efficient supply chain is likely to have
a. high-capacity utilization.
b. low inventory turns.
c. high-capacity cushions.
d. a flexible flow process.
19. It is desirable for a firm in the higher echelon of an efficient supply chain to have
a. high-capacity cushions.
b. delivery by air.
c. a line flow process.
d. high inventory investment.
20. It is recommended that a firm in the higher echelon of an efficient supply chain have
a. delivery by air.
b. high-capacity cushions.
c. low inventory investments.
d. low-capacity utilization.
21. Firms in a responsive supply chain are expected to have
a. long delivery times.
b. high inventory investments.
c. flexible flow process.
d. low-capacity cushions.
22. It is desirable for a firm in a responsive supply chain to have
a. low-capacity cushions.
b. delivery by railroad.
c. high-capacity utilization consistent with high-volume delivery.
d. low inventory investments consistent with fast delivery times.
23. It is recommended that a firm in a responsive supply chain should have
a. volume flexibility.
b. flexible quality policy.
c. standardized product.
d. low-capacity cushion.
24. The objective of a firm in a responsive supply chain is likely to be realized if it has a
a. standardized product.
b. short lead time.
c. low-capacity cushion.
d. line flow process.
25. One source of disruption caused by the internal supply chain is
a. forecast error.
b. underfilled shipments.
c. volume changes.
d. late deliveries.
26. One source of disruption caused by the external supply chain is
a. product or sales promotions.
b. new product or service introduction.
c. late deliveries.
d. engineering changes.
27. Possible causes of disruption due to internal supply chain are
a. late deliveries.
b. machine breakdowns or inexperienced workers.
c. product and service mix changes.
d. underfilled shipments.
28. Last year, CMS Enterprises had total inventories (raw materials, work-in-process, and finished goods) of $5.5 million. During this same year the cost of goods sold was $22 million. The company operates 52 weeks per year. What is the total inventory (measured as weeks of supply) held by CMS Enterprises last year?
a. Less than or equal to 10 weeks of supply
b. Greater than 10 but less than or equal to 12 weeks of supply
c. Greater than 12 but less than or equal to 14 weeks of supply
d. Greater than 14 weeks of supply
29. Henderson Corporation is a supplier of alloy ball bearings to auto manufacturers in Detroit. Because of the specialized manufacturing process employed, considerable work-in-process and raw material inventories are created. The current inventory levels are $1,152,000 and $2,725,000, respectively. In addition, finished goods inventory is $3,225,000, and sales (at cost) for the current year are expected to be about $24 million. The inventory turnover that Henderson Corporation is currently expecting is
a. less than 2.0.
b. greater than 2.0 but less than 2.5.
c. greater than 2.5 but less than 3.0.
d. greater than 3.0.
30. Maple Leaf, Inc., a television manufacturer, would like to reduce its inventory. To this end, you are asked by the operations manager to assess its inventory level. You have the following information on inventories from last year’s financial statement:
Raw materials $2,500,000
Work-in-process $1,000,000
Finished goods $ 800,000
In addition, the cost of goods sold last year (50 weeks) was $15 million. What was the inventory turnover?
a. Less than or equal to 2
b. Greater than 2 but less than 3
c. Greater than 3 but less than 4
d. Greater than 4
31. The average inventory at Hamilton Industries, comprising raw materials, work-in-process, and finished goods, was found to be $17.2 million last year. If the cost of goods sold per week averaged $1.32 million, what was the inventory turnover experienced by Hamilton Industries? Assume the company had 50 working weeks per year.
a. Less than or equal to 3.50
b. Greater than 3.50 but less than 3.75
c. Greater than 3.75 but less than 4.00
d. Greater than 4.00
32. Marvin Johnson, Jr., materials manager at Johnson & Sons, has determined that a certain product experienced 3.8 turns last year. Johnson & Sons operates 52 weeks a year, and its annual sales volume (at cost) was $975,000. What was the average inventory value for this product last year?
a. Less than or equal to $150,000
b. Greater than $150,00 but less than or equal to $300,000
c. Greater than $300,00 but less than or equal to $450,000
d. Greater than $450,000
33. Which one of the following basic patterns of demand is difficult to predict because it is affected by national or international events or because of a lack of demand history reflecting the stages of demand from product development to decline?
a. Horizontal
b. Seasonal
c. Random
d. Cyclical
34. Which one of the following statements about the patterns of a demand series is FALSE?
a. The five basic patterns of most business demand series are the horizontal, trend, seasonal, cyclical, and random.
b. Estimating cyclical movement is difficult. Forecasters do not know the duration of the cycle because they cannot predict the events that cause it.
c. The trend, over an extended period of time, always increases the average level of the series.
d. Every demand series has at least the following two components: horizontal and random.
35. Which one of the following is a leading indicator for the general business cycle?
a. Residential building contracts
b. Retail sales
c. Unemployment figures
d. Bank rates on business loans
36. Which one of the following is a coincident indicator for the general business cycle?
a. Residential building contracts
b. Retail sales
c. Unemployment figures
d. Bank rates on business loans
37. Which one of the following indicators is a lagging indicator of the general business cycle?
a. Residential building contracts
b. Retail sales
c. Unemployment figures
d. Price changes of a major competitor
38. Which one of the following statements about demand indicators is TRUE?
a. Leading indicators are time series with turning points that generally match those of the general business cycle.
b. Coincident indicators are time series with turning points that typically precede the peaks and troughs of the general business cycle.
c. Lagging indicators follow the turning points, typically by several weeks or months.
d. Demand indicators are time series that are used to predict random errors in a forecast before they occur.
39. Which one of the following factors affecting demand for goods and services is an external factor?
a. Product design
b. Consumer tastes
c. Price and advertising promotions
d. Packaging design
40. Which one of the following factors affecting demand for goods and services is an external factor?
a. Salesperson quotas or incentives
b. Expansion or contraction of geographical market target areas
c. Government actions
d. Product mix
41. An example of an external factor affecting the demand for goods or services is
a. product mix changes.
b. the company’s price and advertising promotions.
c. backlog policy.
d. competitor pricing actions.
42. Which one of the following factors affecting demand for goods and services is an internal factor?
a. Backlog policy
b. General state of the economy
c. Competitor actions
d. Consumer tastes
43. Which one of the following factors affecting demand is an internal factor?
a. Public image of the product
b. competitor actions
c. Availability and cost of complementary products
d. Expansion or contraction of geographical market target areas.
44. Which one of the following statements about forecasting is FALSE?
a. To achieve the objective of developing a useful forecast from the information at hand, the forecaster must select the appropriate technique. This choice sometimes involves a trade-off between forecast accuracy and cost.
b. Three general types of forecasting techniques are used for demand forecasting: time-series analysis, causal methods, and judgment methods.
c. Time series express the relationship between the factor to be forecast and related factors, such as promotional campaigns, economic conditions, and competitor actions.
d. A time series is a list of repeated observations of a phenomenon, such as demand, arranged in the order in which they actually occurred.
45. Which one of the following statements about forecasting is TRUE?
a. The five basic patterns of demand are the horizontal, trend, seasonal, cyclical, and the subjective judgment of forecasters.
b. Judgment methods are designed particularly for situations when historical data are lacking.
c. Casual methods are used when historical data are available and the relationship between the factor to be forecast and other external and internal factors cannot be identified.
d. Focused forecasting is a technique that focuses on one particular component of demand and develops a forecast from it.
46. Which one of the following statements is FALSE?
a. Managers are typically interested in forecasts of unit demand for individual products for the short term.
b. Causal models are the methods most often used for short-term forecasting.
c. In the short term, operations managers rarely can wait for the development of causal models, even though these models may be more accurate than time-series models.
d. Managers use judgment methods for short-term forecasts when historical data are not available for a specific term.
47. Which one of the following statements about forecasting is FALSE?
a. In the short term (here, 0–3 months in the future), managers are typically interested in forecasts of total sales and groups (or families) of products.
b. Time-series analysis is the method most often used for short-term forecasting.
c. The need for medium-term forecasts arises from planning problems related to issues of capacity.
d. Determining turning points is very important for the operations manager, particularly in the medium and long term.
48. Which one of the following statements about forecasting is TRUE?
a. Determining turning points, which are periods when the growth rate of demand will change, can best be accomplished with time-series methods.
b. In the short-term (here, 1–3 months in the future), managers are typically interested in forecasts of total sales and groups or families of products.
c. Causal models are the methods most often used for short-term forecasting.
d. For time horizons exceeding two years, forecasts are usually developed for total sales demand in dollars or some other common unit of measurement, such as barrels, pounds, or kilowatts.
49. Using sales force estimates for forecasting has the advantage that
a. no biases exist in the forecasts.
b. statistical estimates of seasonal factors are more precise than any other approach.
c. forecasts of individual sale force members can be easily combined to get regional or national sales totals.
d. confusion between customer “wants” (wish list) and customer “needs” (necessary purchases) is eliminated.
50. Which one of the following is an example of a time-series forecasting technique?
a. Survey analysis
b. Delphi method
c. Trend-adjusted exponential smoothing
d. Market research
51. The judgment methods of forecasting are to be used for purposes of
a. making adjustments to quantitative forecasts due to unusual circumstances.
b. forecasting seasonal demands in lieu of time-series approaches.
c. avoiding the calculations necessary for quantitative forecasts.
d. making forecasts more variable.
52. The Delphi method of forecasting is useful when
a. judgment and opinion are the only bases for making informed projections.
b. a systematic approach to creating and testing hypotheses is needed and the data are usually gathered by sending a questionnaire to consumers.
c. historical data are available and the relationship between the factor to be forecast and other external or internal factors can be identified.
d. historical data is available and the best basis for making projections is to use past demand patterns.
53. Which one of the following statements about forecasting is FALSE?
a. You should use the simple moving average method to estimate the mean demand of a time series that has a pronounced trend and seasonal influences.
b. The weighted moving average method allows forecasters to emphasize recent demand over earlier demand. The forecast will be more responsive to change in the underlying average of the demand series.
c. The most frequently used time-series forecasting method is exponential smoothing because of its simplicity and the small amount of data needed to support it.
d. In exponential smoothing, higher values place greater weight on recent demands in computing the average.
54. When the underlying mean of a time series changes frequently but there is no trend, cyclical, or seasonal influence,
a. a simple moving average forecast with n = 20 should outperform a simple moving average forecast with n = 3.
b. a simple moving average forecast with n = 3 should outperform a simple moving average forecast with n = 20.
c. a simple moving average forecast with n = 20 should perform about the same as a simple moving average forecast with n = 3.
d. an exponential smoothing forecast with a = 0.01 should outperform a simple moving average forecast with a = 0.30.
55. When the underlying mean of a time series is very stable and there are no trend, cyclical, or seasonal influences,
a. a simple moving average forecast with n = 20 should outperform a simple moving average forecast with n = 3.
b. a simple moving average forecast with n = 3 should outperform a simple moving average forecast with n = 20.
c. a simple moving average forecast with n = 20 should perform about the same as a simple moving average forecast with n = 3.
d. an exponential smoothing forecast with a = 0.30 should outperform a simple moving average forecast with a = 0.01.
56. With the trend-adjusted exponential smoothing method,
a. the forecast for the next period is simply the average computed this period.
b. an estimate of the trend is computed by taking the difference between the demand this period and the demand last period to avoid lengthy averaging calculations.
c. the only smoothing is done on the trend estimates using exponential smoothing.
d. the forecast can be adjusted to account for changes in the trend.
57. With the multiplicative seasonal method of forecasting,
a. the times series cannot exhibit a trend.
b. seasonal factors are multiplied by an estimate of average demand to arrive at a seasonal forecast.
c. the seasonal amplitude is a constant, regardless of the magnitude of average demand.
d. there can only be four seasons in the time-series data.
58. The multiplicative seasonal method is most appropriate when
a. the seasonal influence is a constant regardless of the level of demand.
b. the seasonal influence is erratic, changing in the timing of the peaks and valleys.
c. the seasonal influence is dependent on the level of demand.
d. the demand each period is a constant multiple of the demand in the previous period.
59. Which one of the following statements about forecasting is FALSE?
a. The method for incorporating a trend in an exponentially smoothed forecast requires the estimation of three smoothing constants: one for the mean, one for the trend, and one for the error.
b. The cumulative sum of forecast errors (CFE) is useful in measuring the bias in a forecast.
c. The standard deviation and the mean absolute deviation measure the dispersion of forecast errors.
d. A tracking signal is a measure that indicates whether a method of forecasting has any built-in biases over a period of time.
60. Which one of the following is most useful for measuring the bias in a forecast?
a. Cumulative sum of forecast errors
b. Standard deviation of forecast errors
c. Mean absolute deviation of forecast errors
d. Percentage forecast error in period t
61. Which one of the following time-series forecasting methods will generate the most accurate forecasts when demands have a consistent trend pattern?
a. Simple moving average method
b. Weighted moving average method
c. Exponential smoothing method
d. Trend-adjusted exponential smoothing method
62. A tracking signal greater than zero and a mean absolute deviation greater than zero imply that the forecast has
a. no bias and no variability of forecast error.
b. a nonzero amount of bias and a nonzero amount of forecast error variability.
c. no bias and a nonzero amount of forecast error variability.
d. a nonzero amount of bias and no variability of forecast error.
63. Assume that a time-series forecast is generated for future demand, and subsequently it is observed that the forecast method did not accurately predict the actual demand. Specifically, the forecast errors were found to be:
Mean absolute percent error= 10%
Cumulative sum of forecast errors = 0%
Which one of the statements concerning this forecast is TRUE?
a. The forecast has no bias but has a positive standard deviation of errors.
b. The forecast has a positive bias and a standard deviation of errors equal to zero.
c. The forecast has no bias and has a standard deviation of errors equal to zero.
d. The forecast has a positive bias and a positive standard deviation of errors.
64. Which one of the following is an example of causal forecasting technique?
a. Weighted moving average
b. Linear regression
c. Exponential smoothing
d. Delphi method
65. Which of the following is an example of a judgmental forecasting technique?
a. Market research
b. Multiplicative seasonal method
c. Simple moving average
d. Linear regression
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Table 12.1
|
Month
|
Demand
|
|
January
|
55
|
|
February
|
52
|
|
March
|
57
|
|
April
|
64
|
|
May
|
58
|
|
June
|
54
|
|
July
|
62
|
|
August
|
69
|
|
|
66. Use the information in Table 12.1. Your boss has asked you to find a good technique to forecast short-term demand for an important product. You have decided to test the following four techniques against the historical data already given:
*Three-month simple moving average
*Three-month weighted moving average, with weight of 0.6 for the most recent month, 0.3 for the
second-most-recent month, and 0.1 for the third-most-recent month
*Three-month weighted moving average, with weights of 0.5 for the most recent month, 0.3 for the
second-most-recent month, and 0.2 for the third-most-recent month
*Exponential smoothing (a = 0.3 and the forecast for March was 55)
Use each of the four techniques to forecast April through August, and then use the five months of forecasts to calculate MAD. Round all forecasts to the nearest whole number (i.e., 57.5 rounds to 58) just before doing your MAD calculations. Which of the four techniques is best in terms of MAD?
a. Three-month simple moving average
b. Three-month weighted moving average (0.6, 0.3, 0.1)
c. Three-month weighted moving average (0.5, 0.3, 0.2)
d. Exponential smoothing (a = 0.3)
67. Use the information in Table 12.1. What would be the forecast for September if the exponential smoothing technique were used? (a = 0.30 and the forecast for March was 55)
a. Less than or equal to 65
b. Greater than 65 but less than or equal to 67
c. Greater than 67 but less than or equal to 69
d. Greater than 69
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Table 12.2
The manager of a pizza shop must forecast weekly demand for special pizzas so that he can order pizza shells weekly. Recent demand has been:
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68. Use the information from Table 12.2. Using a four-week moving average, what is the forecast for week 7?
a. Less than or equal to 58
b. Greater than 58 but less than or equal to 60
c. Greater than 60 but less than or equal to 62
d. Greater than 62
69. Use the information from Table 12.2. If a four-week weighted moving average were used, what would be the forecast for week 7? (The weights are 0.77, 0.11, 0.11, and 0.01.)
a. Less than or equal to 58
b. Greater than 58 but less than or equal to 59
c. Greater than 59 but less than or equal to 60
d. Greater than 60
70. Demand for a new five-inch color TV during the last six periods has been as follows:
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What is the forecast for period 7 if the company uses the simple moving average method with n = 4?
a. Less than or equal to 115
b. Greater than 115 but less than or equal to 120
c. Greater than 120 but less than or equal to 125
d. Greater than 125
71. Demands for a newly developed salad bar at the Great Professional restaurant for the first six months of this year are shown following. What is the forecast for July if the weighted moving average method is used? (Use weights of 0.5 for the most recent demand, 0.3, and 0.2.)
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a. Less than or equal to 432 units
b. Greater than 432 units but less than or equal to 442 units
c. Greater than 442 units but less than or equal to 452 units
d. Greater than 452
72. It is now near the end of May and you must prepare a forecast for June for a certain product. The forecast for May was 900 units. The actual demand for May was 1000 units. You are using the exponential smoothing method with a = 0.20. The forecast for June is
a. less than 925 units.
b. greater than or equal to 925 units but less than 950 units.
c. greater than or equal to 950 units but less than 1000 units.
d. greater than or equal to 1000 units.
73. The owner of the Crossed Connections electronic appliance repair shop is enjoying increasing demand for her services. Total weekly demand, measured in standard labor hours, has been increasing. The owner uses trend-adjusted exponential smoothing to make forecasts for the following week so that she can plan work schedules and staffing levels. She has the following data to prepare her forecast:
At–1 = 100 hours a = 0.30
Tt–1 = 10 hours b = 0.10
Dt= 120 hours
Assuming she is now at the end of week t, what is the forecast for week t + 1?
a. Less than or equal to 114 hours
b. Greater than 114 hours but less than or equal to 118 hours
c. Greater than 118 hours but less than or equal to 122 hours
d. Greater than 122 hours
74. The Acme Computer Company has recorded sales of one of its products for a six-week period:
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Using the three-week moving average method, forecast sales for week 7.
a. 20
b. 21
c. 22
d. 23
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Table 12.3
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75. Use the information in Table 12.3. Compute a three-week moving average forecast for the arrival of medical clinic patients in week 5.
a. Less than or equal to 382
b. Greater than 382 but less than or equal to 389
c. Greater than 389 but less than or equal to 396
d. Greater than 396
76. Use the information in Table 12.3. If the actual number of patients is 415 in week 5, what is the forecast for week 6 using a three-week moving average forecast?
a. Less than or equal to 390
b. Greater than 390 but less than or equal to 398
c. Greater than 398 but less than or equal to 406
d. Greater than 406
77. Use the information in Table 12.3. Calculate the exponential smoothing forecast for week 5 using a = 0.10 and F4 = 410.
a. Less than or equal to 400
b. Greater than 400 but less than or equal to 408
c. Greater than 408 but less than or equal to 416
d. Greater than 416
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Table 12.4
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78. Use the information in Table 12.4. Use the three-month moving average method to forecast sales for June.
a. Less than or equal to 20 units
b. Greater than 20 but less than or equal to 22 units
c. Greater than 22 but less than or equal to 24 units
d. Greater than 24 units
79. Use the information in Table 12.4. Suppose actual sales in June turn out to be 40 units. Use the three-month moving average method to forecast the sales in July.
a. Less than or equal to 27
b. Greater than 27 but less than or equal to 29 units
c. Greater than 29 but less than or equal to 31 units
d. Greater than 31 units
80. Use the information in Table 12.4. What is the forecast for July with the two-month moving average method and June sales of 40 units?
a. Less than or equal to 25 units
b. Greater than 25 but less than or equal to 30 units
c. Greater than 30 but less than or equal to 35 units
d. Greater than 35 units
81. Use the information in Table 12.4. The forecasting equation for a three-month weighted moving average is:
At = W1Dt + W2Dt–1 + W3Dt–2
If the sales for June were 40 units and the weights are W1= 1/2, W2= 1/3, and W3 = 1/6, what is the forecast for July?
a. Less than or equal to 30 units
b. Greater than 30 but less than or equal to 33 units
c. Greater than 33 but less than or equal to 36 units
d. Greater than 36 units
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Table 12.5
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82. Use the information in Table 12.5. Using the simple moving average technique for the most recent three months, what will be the forecasted demand for November?
a. Less than or equal to 260 units
b. Greater than 260, but less than or equal to 275 units
c. Greater than 275, but less than or equal to 290 units
d. More than 290 units
83. Use the information in Table 12.5. Using the weighted moving average technique and the following weights, what is the forecasted demand for November?
|
Time Period
|
Weight
|
|
Most recent month
|
50%
|
|
1 month ago
|
20%
|
|
2 months ago
|
20%
|
|
3 months ago
|
10%
|
a. Less than or equal to 250 units
b. Greater than 250 but less than or equal to 265 units
c. Greater than 265 but less than or equal to 280 units
d. More than 280 units
84. Use the information in Table 12.5. Using the exponential smoothing method, with alpha equal to 0.2, what is the forecasted demand for November? Use an initial value for the forecast equal to 277 units.
a. Less than or equal to 260 units
b. Greater than 260 but less than or equal to 275 units
c. Greater than 275 but less than or equal to 285 units
d. More than 285 units
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Table 12.6
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85. Use the information in Table 12.6. Use an exponential smoothing model with a smoothing parameter of 0.30 to forecast sales for year 5.
a. Less than or equal to 2
b. Greater than 2 but less than or equal to 3
c. Greater than 3 but less than or equal to 4
d. Greater than 4
c(Time-Series Methods, moderate)
86. Use the information in Table 12.6. Use the exponential smoothing method with a = 0.5 to forecast the sales for year 5.
a. Less than or equal to 3
b. Greater than 3 but less than or equal to 4
c. Greater than 4 but less than or equal to 5
d. Greater than 5
b(Time-Series Methods, moderate)
87. Use the information in Table 12.6. The annual sales of the J. J. Company seem to exhibit a trend. Use trend-adjusted exponential smoothing to forecast annual sales in year 5.
Note:
1. Use the forecast for year 4 as an estimate of the average demand.
2. a = 0.3; b = 0.2
3. An estimate of the trend in year 3 is 0.5.
a. Less than or equal to 4
b. Greater than 4 but less than or equal to 5
c. Greater than 5 but less than or equal to 6
d. Greater than 6
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Table 12.7
TOMBOW is a small manufacturer of pencils and has had the following sales record for the most recent five months:
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Use an exponential smoothing model to forecast sales in months 2, 3, 4, and 5. Let the smoothing parameter a equal 0.6; select F1 = 150 to get the forecast started.
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88. Use the information in Table 12.7. The forecast for month 2 is
a. less than or equal to 120 units.
b. greater than 120 but less than or equal to 140 units.
c. greater than 140 but less than or equal to 160 units.
d. greater than 160 units.
c(Time-Series Methods, moderate)
89. Use the information in Table 12.7. The forecast for month 3 is
a. less than or equal to 140 units.
b. greater than 140 but less than or equal to 160 units.
c. greater than 160 but less than or equal to 180 units.
d. greater than 180 units.
b(Time-Series Methods, moderate)
90. Use the information in Table 12.7. The forecast for month 4 is
a. less than or equal to 140 units.
b. greater than 140 but less than or equal to 150
c. greater than 150 but less than or equal to 160 units.
d. greater than 160 units.
91. Use the information in Table 12.7. The forecast for month 5 is
a. less than or equal to 150 units.
b. greater than 150 but less than or equal to 160 units.
c. greater than 160 but less than or equal to 170 units.
d. greater than 170 units.
92. Use the information in Table 12.7. The cumulative sum of errors CFE from months 2 through 5 is
a. less than or equal to 80.
b. greater than 80 but less than or equal to 85.
c. greater than 87 but less than or equal to 90.
d. greater than 90.
93. Use the information in Table 12.7. What is the MAD for months 2 through five?
a. Less than or equal to 20
b. Greater than 20 but less than or equal to 25
c. Greater than 25 but less than or equal to 30
d. Greater than 30
94. The Classical Consultant Company provides forecasting research for clients such as a group of five doctors associated with a new hospital health maintenance program. The company has been asked to forecast the number of patients requesting blood analysis per week. The past weekly average is 38 and for the trend is 2 per week. This week’s demand was 42 blood tests. How many patients Will come next week? (Suppose a = 0.10 and b = 0.30.)
a. Less than or equal to 39
b. Greater than 39 but less than or equal to 41
c. Greater than 41 but less than or equal to 43
d. Greater than 43
Table 12.8
A manager wants to forecast the monthly demand for a machine the company produces.
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95. Use the information in Table 12.8. Forecast the demand for the machine for month 7, using the three-month moving average method.
a. Less than or equal to 56
b. Greater than 56 but less than or equal to 58
c. Greater than 58 but less than or equal to 61
d. Greater than 61
96. Use the information in Table 12.8. Use the weighted moving average method to calculate the forecast for month 7. The weights are 0.50, 0.30, and 0.20, where 0.50 refers to the most recent demand.
a. Less than or equal to 56
b. Greater than 56 but less than or equal to 58
c. Greater than 58 but less than or equal to 61
d. Greater than 61
97. Use the information in Table 12.8. Calculate the MAD for months 4 through 6 for the three-month moving average forecasts.
a. Less than or equal to 2
b. Greater than 2 but less than or equal to 4
c. Greater than 4 but less than or equal to 6
d. Greater than 6
98. Use the information in Table 12.8. Calculate the MAD for months 4 through 6 for the weighted moving average forecasts.
a. Less than or equal to 2
b. Greater than 2 but less than or equal to 3
c. Greater than 3 but less than or equal to 4
d. Greater than 4
99. The management of a company specializing in securities analysis has been using two forecasting methods to follow a new stock issue.
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Which one of the following statements is TRUE?
a. Based on MAD, the exponential smoothing approach is more accurate.
b. Based on CFE, the bias of the judgment forecasts is larger than the bias of the exponential smoothing forecasts.
c. Based on MAD, the judgmental method is more accurate.
d. Based on CFE, the bias of the exponential smoothing forecasts is steadily improving.
100. Consider the following data concerning the performance of a forecasting method.
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a. The CFE is greater than 100, and the MAD is less than 50.
b. The CFE is less than 100, and the MAD is less than 50.
c. The CFE is less than 100, and the MAD is greater than 50.
d. The CFE is greater than 100, and the MAD is greater than 50.
Table 12.9
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Quarter
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Forecasted Demand (Units)
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Actual Demand (Units)
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1
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85
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95
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2
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55
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55
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3
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70
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45
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4
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60
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75
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101. Use the information in Table 12.9. What is the cumulative sum of forecast errors for the data?
a. 0 units
b. 1–25 units
c. 26–50 units
d. Greater than 50 units
102. Use the information in Table 12.9. What is the mean absolute deviation of forecast errors for the data?
a. 0 units
b. 1–25 units
c. 26–50 units
d. Greater than 50 units
103. Use the information in Table 12.9. What is the standard deviation of forecast errors for the data?
a. 0 units
b. 1–10 units
c. 11–20 units
d. Greater than 20 units
104. Use the information in Table 12.9. What is the mean absolute percent error for the data?
a. Less than 5 percent
b. 5–12 percent
c. 13–18 percent
d. Greater than 18 percent
105. Which one of the following reasons creates a pressure for reducing inventories?
a. High interest or opportunity cost
b. On-time delivery requests from customers
c. Need for better labor or equipment utilization
d. Need for reduction in total payments to suppliers
106. Which one of the following statements about anticipation inventory is TRUE?
a. It is a portion of inventory that is reserved for the best customer.
b. It is a portion of inventory that is used to absorb only the variation in demand.
c. It is a portion of inventory that is used to absorb only the variation in supply.
d. It is a portion of inventory that is used to absorb variation in demand or supply.
107. Pipeline inventory is a type of inventory that is usually maintained by
a. gasoline suppliers only.
b. electrical utilities only.
c. any manufacturer moving materials from point to point.
d. a trucking company making emergency shipments.
108. One of the secondary levers for reducing safety stock inventory is to reduce.
a. supply uncertainties.
b. setup cost.
c. capacity cushions.
d. delivery size.
109. One of the secondary levers for reducing anticipation inventory is to
a. keep nonperishable product.
b. reduce holding cost.
c. add products with alternating demand cycles.
d. accept only large orders.
110. One of the secondary levers for reducing pipeline inventory is to
a. offer seasonal pricing plans.
b. increase capacity cushions.
c. accept only large orders.
d. select more responsive suppliers.
111. For a company that manufactures most of its products as standards, more inventory should be placed
a. closer to the customer.
b. within the plant as work-in-process.
c. close to suppliers.
d. equally distributed between the plants and warehouses.
112. What is generally true about the class A items in ABC analysis? They represent
a. about 20 percent of all items.
b. about 30 percent of all items.
c. about 20 percent of the dollar usage.
d. about 50 percent of the dollar usage.
113. The goal of ABC analysis is to
a. determine the profitability of items.
b. estimate average volume per dollar value.
c. estimate dollar value per pound.
d. to identify the A items for better inventory control.
114. Even though the economic order quantity (EOQ) is optimal only when five assumptions are satisfied, it serves as a reasonable first approximation even when these assumptions do not quite apply. Which one of the following is not an assumption of the EOQ?
a. Decisions for one item can be made independently of decisions made for other items.
b. There is no uncertainty in lead time.
c. The amount of an order received is exactly equal to what was ordered, without any “short shipments” from a supplier or scrap losses in the shop.
d. Quantity discounts can be taken advantage of for large lot sizes.
115. Which one of the following statements regarding the economic order quantity (EOQ) is TRUE?
a. The EOQ model combines several different item orders to the same supplier.
b. If an order quantity is larger than the EOQ, the annual holding cost for cycle inventory exceeds the annual ordering cost.
c. The EOQ model assumes a variable demand pattern.
d. When the interest rate drops, the inventory holding cost decreases and the EOQ decreases.
116. Which one of the following statements concerning the economic order quantity (EOQ) model is TRUE?
a. An increase in holding cost will increase the EOQ value.
b. A decrease in demand will increase the EOQ value.
c. A decrease in holding cost will increase the EOQ value.
d. None of the above are true.
117. Which one of the following statements concerning the economic order quantity (EOQ) is TRUE?
a. The EOQ is the order quantity that minimizes annual inventory holding costs.
b. An increase in demand will increase the EOQ value.
c. The time between orders (TBO) will increase with an increase in holding costs.
d. The EOQ formula assumes that there are only three relevant costs: holding, transportation, and setup.
118. The Lemma Company manufactures and sells 10 products. Ways have been found to cut both the setup and inventory holding costs in half. What effect will this have on the economic order quantities of the 10 products?
a. They will be reduced by a factor of 1.41.
b. They will not change.
c. They will be reduced by a factor of 2.00.
d. They will be increased by a factor of 1.41.
119. Sensitivity analysis on the economic order quantity (EOQ) formula can help the operations manager answer several questions on how to manage inventories. Which one of the following questions is NOT answered by EOQ sensitivity analysis?
a. How critical are errors in estimating demand (D), inventory holding cost (H), and setup cost (S)?
b. What should happen to lot sizes if interest rates drop?
c. What should happen to cycle inventory if the demand rate increases?
d. What should happen to lot sizes if supply and lead-time uncertainty increase?
120. Which one of the following statements concerning a continuous review system is best?
a. The inventory position (IP) of an item measures the item’s ability to satisfy future demand, relying only on the on-hand inventory.
b. An item’s inventory position under a continuous review system increases by Q units as soon as an order is received.
c. An item’s on-hand inventory increases by Q units as soon as an order is placed.
d. Under a continuous review system, an item’s inventory position corresponds to the on-hand inventory unless there are backorders or one or more scheduled receipts.
121. Which one of the following descriptions best defines the cycle-service level as a measure of customer service?
a. The preferred proportion of annual demand instantaneously filled from stock
b. The number of stockouts tolerated per year
c. The preferred proportion of days in the year when an item is in stock
d. The desired probability of not running out of stock in any one inventory cycle
122. Which one of the following statements is best?
a. The level of safety stock maintained decreases when the desired cycle-service level increases.
b. The level of safety stock maintained decreases when the standard deviation of demand during lead time increases.
c. When no safety stock is maintained, stockouts will occur during approximately 50 percent of the cycles.
d. The level of safety stock maintained is greater if mean absolute deviation (MAD) is used rather than standard deviation in estimating forecast errors.
123. An inventory system answers two important questions: when to order and how much to order. Which of the following statements correctly explains how a Q system (continuous review system) or a P system (periodic review system) answers these questions?
a. Under a Q system, a fixed quantity is ordered every P time period.
b. Under a Q system, an order is placed to replenish the inventory position up to the target level T when the inventory position reaches the reorder point R.
c. Under a P system, a fixed quantity Q is ordered when the inventory position reaches the reorder point R.
d. Under a P system, an order is placed to replenish the inventory position up to the target level T every P time periods.
124. Which one of the following statements is best?
a. A P system requires more safety stock than a Q system.
b. A P system lends itself more to quantity discounts than does a Q system.
c. A P system requires more administrative control and computer support than does a Q system.
d. In a periodic review system, the value of Q is kept the same from one cycle to another.
125. Which one of the following statements represents an advantage of the P system over the Q system?
a. Less safety stock is carried to achieve the same service level.
b. The replenishment intervals can be more easily individualized for items.
c. Orders can be more easily combined to the same supplier.
d. A P system is more suitable for quantity discounts and capacity limitations.
126. Which one of the following statements represents an advantage of a Q system over the P system?
a. A perpetual inventory system is not mandatory.
b. Orders for multiple items from the same supplier can be combined more easily.
c. Fixed replenishment intervals are possible, which can be, administratively, quite convenient.
d. The Q system is more suited for quantity discounts and physical limitations.
127. Which one of the following statements about inventory control systems is best?
a. A single-bin system is essentially a P system, with the target inventory and current inventory position established visually.
b. A base-stock system minimizes ordering and setup costs by placing orders more infrequently.
c. The base-stock system is mostly used for inexpensive items since it maximizes cycle inventory costs.
d. Visual systems are intended for use with high-value items like jet engines, that don’t experience a steady demand.
128. Which one of the following descriptions of a base-stock system is best?
a. It is particularly attractive when review and ordering cost are both significant.
b. It can be seen as a way to minimize cycle inventory.
c. Examples include gasoline storage tanks at a service station.
d. An item’s inventory is stored at two different locations or “bins.”
129. Which one of the following statements about inventory control systems is true?
a. A two-bin inventory system is essentially a P system because the inventory is reviewed only on a periodic basis.
b. An optional replenishment system is particularly attractive when both review and ordering costs are significant.
c. Visual systems are difficult to administer because records on current inventory position have to be kept for every item.
d. Overstocking is quite common for those items that are managed by using the base-stock system.
130. Which one of the following is NOT a method for tracking inventory and assuring accurate records?
a. Assign responsibility to specific employees for issuing and receiving materials
b. Updating the reorder points to minimize safety stock
c. Cycle counting
d. Logic error checks
131. Wood County Hospital consumed 400 boxes of bandages per week last year. The price of bandages was $80 per box, and the hospital operates 52 weeks per year. The cost of processing an order was $64, and the cost of holding one box throughout a full year was 20 percent of the value of the material.
Last year the hospital ordered bandages, on average, once every two weeks, each time ordering 800 boxes. What extra cost did the hospital incur that could have been avoided if the EOQ concept had been applied?
a. Less than $650
b. More than $650 and less than $1050
c. More than $1050 and less than $1450
d. More than $1450
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Table 13.1
Fred Jacobs, assistant manager of Home and Hearth, is reviewing the costs associated with the store’s best-selling frying pan. The data available to Mr. Jacobs concerning this frying pan follow.
Demand = 20 units/week
Order cost = $75/order
Holding cost = $15/unit/year
Home and Hearth operates 50 weeks per year.
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132. Use the information in Table 13.1. The current order quantity is 125 units per order. What is the total annual ordering cost and holding cost for this order size?
a. Less than or equal to $750
b. Greater than $750 but less than or equal to $1000
c. Greater than $1000 but less than or equal to $1250
d. Greater than $1250
133. Use the information in Table 13.1. Jacobs has recently learned of the economic order quantity in his business management class. If Home and Hearth implemented the EOQ, which of the following statements is TRUE?
a. The annual order cost and holding cost would increase.
b. The economic order quantity would be greater than 125 units.
c. The annual order cost would increase.
d. The annual holding cost would increase.
134. A neighborhood sportswear store sells a pair of Nike sneakers for $40. Due to the recent fitness craze, these shoes are in high demand: 50 pairs of shoes are sold per week. The ordering cost is $20/order, and the annual holding cost is 20 percent of selling price. If the store operates 52 weeks a year, what can you say about the current lot size of 235?
a. Too large
b. Too small
c. Just right
d. Cannot tell from the information given
135. An item experiences an annual demand of 7200 units. It costs $8 to hold an item in inventory for one year and $16 to place an order. If the EOQ model is used, what is the time between orders? Assume that there are 52 business weeks in a year.
a. Less than 1 week
b. Greater than 1 week but less than or equal to 2 weeks
c. Greater than 2 weeks but less than or equal to 3 weeks
d. Greater than 3 weeks
Table 13.2
Consider the following data for an independent demand item maintained by Vicki Crittenden, the proprietor of a local auto repair shop:
Weekly demand = 50 units
Ordering cost = $8/order
Holding cost = $4/order
Weeks in a year = 50
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136. Use the information in Table 13.2. If Crittenden uses the EOQ model, how frequently must she place orders for this item?
a. Every week
b. Every 2 weeks
c. Every 3 weeks
d. Every 4 weeks
137. Use the information in Table 13.2. Due to new ordering procedures initiated by Crittenden, the ordering cost is dropping to $4/order. At the same time, the weekly demand increases to 64 units per week due to an increase in business. What effect do these changes have on the EOQ quantity for this item?
a. The EOQ quantity remains unchanged.
b. The EOQ quantity increases by 20 percent.
c. The EOQ quantity decreases by 20 percent.
d. Sufficient information is not available for answering this question.
138. Sark Incorporated is out of stock for a key item, which has a backorder of 200 units. An open order of 750 units is scheduled for arrival on the following Monday. What is the current inventory position at Sark?
a. Less than or equal to 0 units
b. Greater than 0 but less than or equal to 500 units
c. Greater than 500 but less than or equal to 750 units
d. Greater than 750 units
139. For an item under continuous review, the on-hand inventory is only 20 units and the reorder point R is 100 units. There are no backorders, but there is one open order for 90 units. Which one of the following statements is TRUE?
a. There is no need to order at the present time.
b. The current inventory position is 100 units.
c. An order should be placed now for 20 units.
d. An order should be placed now for 10 units.
140. On-hand inventory of an item is only 10 units, and the reorder point R is 135. There are no backorders, and an open order of 110 units is scheduled to arrive next week. Which one of the following statements is TRUE?
a. There is no need to order at the present time.
b. A new order should be issued now.
c. The current inventory position for this item is 125 units.
d. The current inventory position for this item is 110 units.
141. The Franklin County Hospital is currently using a continuous review system to control its inventory. One of the items in inventory is an elastic band. The average demand for this item is 200 boxes per week, and the standard deviation in weekly demand is 50 boxes. If the lead time is 3 weeks and the hospital wants a 99 percent cycle-service level, what is the reorder point for this item? A normal table is appended to this exam.
a. Less than 650 boxes
b. Greater than 650 boxes but less than 750 boxes
c. Greater than 750 boxes but less than 850 boxes
d. Greater than 850 boxes
142. Demand for an item is 1000 units per week, with a standard deviation in weekly demand of 60 units. The lead time is 2 weeks. The company wants to maintain an 88 percent cycle-service level. Assume demand during lead time to be normally distributed. For a continuous review system, what should be the reorder point? A normal table is attached at the end of this exam.
a. Less than 2075
b. Between 2075 and 2085
c. Between 2085 and 2095
d. Greater than 2095
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Table 13.3
The Medfield Import Autoparts Company imports and sells standard air filters for most Japanese cars, and it operates under the continuous review system. The average demand for this item is 1200 units per month (14,400 per year), and the standard deviation in monthly demand is 250 units. It costs the company $225 to process each order, and the lead time is 2 months. The holding cost for one unit is $0.50 per year, and the company policy is to maintain a 95 percent cycle-service level. A normal table is appended to this exam.
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143. Use the information in Table 13.3. What is the EOQ (economic order quantity) for this air filter?
a. Less than 2,000 units
b. Greater than 2,000 units but less than 3,000 units
c. Greater than 3,000 units but less than 4,000 units
d. Greater than 4,000 units
144. Use the information in Table 13.3. What is the reorder point R to satisfy a 95 percent cycle-service level?
a. Less than 2800 units
b. Greater than 2800 units but less than 2900 units
c. Greater than 2900 units but less than 3000 units
d. Greater than 3000 units
145. Use the information in Table 13.3. What is the reorder point R if the cycle-service level is brought down to 80 percent?
a. Less than 2800 units
b. Greater than 2800 units but less than 2900 units
c. Greater than 2900 units but less than 3000 units
d. Greater than 3000
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Table 13.4
A company operating under a continuous review system has an average demand of 50 units per week for the item it produces. The standard deviation in weekly demand is 20 units. The lead time for the item is 6 weeks, and it costs the company $30 to process each order. The holding cost for each unit is $10 per year. The company operates 52 weeks per year. A normal table is appended to this exam.
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146. Use the information in Table 13.4. What is the economic order quantity (EOQ) for this item?
a. Less than 175 units
b. Greater than 175 units but less than or equal to 200 units
c. Greater than 200 units but less than or equal to 225 units
d. Greater than 225 units
147. Use the information in Table 13.4. What is the desired safety stock level if the company has a policy of maintaining a 90 percent cycle-service level?
a. Less than 50 units
b. Between 50 units and 100 units
c. Between 100 units and 150 units
d. Greater than 150 units
148. Use the information in Table 13.4. What is the reorder point if the company finally decides to have a 95 percent cycle-service level?
a. Less than or equal to 300 units
b. Between 300 and 325 units
c. Between 325 and 350 units
d. Greater than 350 units
Table 13.5
You are the operations manager of a firm that uses the continuous review inventory control system. Suppose the firm operates 52 weeks a year and has the following characteristics for its primary item:
Demand = 25,000 units/year
Ordering cost = $30/order
Holding cost = $8/unit/year
Lead time = 2 weeks
Standard deviation in weekly demand = 100 units
A normal table is appended to this exam.
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149. Use the information in Table 13.5. What safety stock level provides a 95 percent cycle-service level?
a. Less than 150 units
b. Between 150 and 200 units
c. Between 200 and 250 units
d. Greater than 250 units
150. Use the information in Table 13.5. What is the economic order quantity for this item?
a. Less than 400 units
b. Between 400 and 450 units
c. Between 450 and 500 units
d. Greater than 500 units
Table 13.6
Peterson Enterprises uses a continuous review inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item:
Demand = 50,000 units/year
Ordering cost = $35/order
Holding cost = $2/unit/year
Lead time = 3 weeks
Standard deviation in weekly demand = 125 units
A normal table is appended to this exam.
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151. Use the information in Table 13.6. What is the EOQ for this item?
a. Less than 1100 units
b. Between 1100 and 1200 units
c. Between 1200 and 1300 units
d. More than 1300 units
152. Use the information in Table 13.6. If Peterson wishes to provide a 90 percent cycle-service level, what is the reorder point?
a. Less than or equal to 2700 units
b. Greater than 2700 but less than or equal to 3100 units
c. Greater than 3100 but less than or equal to 3500 units
d. Greater than 3500 units
153. Cynthia Korinsky, manager of a large medical supply house that operates 50 weeks per year and 5 days per week, has decided to implement a periodic review system for all class A items. One such item has the following characteristics:
Demand = 10,000 units/year (or 40 units per workday)
Order cost = $50/order
Holding cost = $5/unit/year
If Korinsky wishes to minimize total cost (thereby approximating the EOQ), what should be P, the number of workdays between orders?
a. Less than or equal to 10 days
b. Greater than 10 days but less than or equal to 12 days
c. Greater than 12 days but less than or equal to 14 days
d. Greater than 14 days
Table 13.7
Demand = 5200 units/year
Standard deviation of weekly demand = 11 units
Ordering costs = $45/order
Holding costs = $2/unit/year
Cycle-service level = 90% (z for 90% = 1.28)
Lead time = 3 weeks
Number of weeks per year = 52 weeks
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154. Use the information in Table 13.7. If a firm uses the continuous review system to control the inventory, what would be the reorder point?
a. 0 units
b. Between 1 and 300 units
c. Between 301 and 600 units
d. Above 600 units
155. Use the information in Table 13.7. The firm decided to change to the periodic review system to control the item’s inventory. For the most recent review, an inventory clerk checked the inventory of this item and found 500 units. There were no scheduled receipts at the time. How many units should be ordered? (HINT: Use the EOQ model to derive P, the time between reviews.)
a. 0 units
b. Between 1 and 300 units
c. Between 301 and 600 units
d. Above 600 units
156. Your firm uses a continuous review system (Q system), where the inventory position is updated after every transaction. The firm operates 52 weeks per year. One of the items has the following characteristics:
Demand = 14,560 units per year
Ordering cost = $40 per order
Holding cost = $6 per unit per year
Lead time = 2 weeks
Standard deviation in weekly demand = 100 units
Cycle-service level = 80 percent
If Q is made equal to the EOQ, what are the desired values for Q and R?
a. Q is between 65 and 69, and R is between 398 and 402.
b. Q is between 65 and 69, and R is between 362 and 366.
c. Q is between 439 and 443, and R is between 678 and 682.
d. Q is between 439 and 443, and R is between 559 and 563.
Table 13.8
Demand = 52,000 units/year
Standard deviation of weekly demand = 110 units
Ordering costs = $45/order
Holding costs = $0.50/unit/year
Cycle-service level = 90%
Lead time = 2 weeks
Number of weeks per year = 52 weeks
A normal table is appended to this exam.
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157. Use the information in Table 13.8. A firm uses the periodic review system to control the item depicted above. It reviews the item’s status every three weeks (P = 3). At the most recent review an inventory clerk just checked the inventory of this item and found 1500 units. There were no scheduled receipts and no back orders. How many units should be ordered? (Hint: You must calculate T before answering this question.)
a. 0 units
b. Between 1 and 3750 units
c. Between 3751 and 4000 units
d. Greater than 4000 units
158. Use the information in Table 13.8. If the firm changed to a continuous review system, what would be the reorder point?
a. 0 units
b. Between 1 and 1000 units
c. Between 1000 and 2000 units
d. Greater than 2000 units
159. Use the information in Table 13.8. What is the EOQ for this item?
a. Between 1 and 1500 units
b. Between 1501 and 3000 units
c. Between 3001 and 4500 units
d. Greater than 4500 units
Table 13.9
Demand = 140 units/week
Standard deviation in weekly demand = 21 units
Ordering cost = $20/order
Holding cost = $1 per unit per year
Cycle-service level = 85 percent
Lead time = 6 weeks
A normal table is appended to this exam.
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160. Use the information in Table 13.9. Design a continuous review system making Q equal to EOQ. What will be the economic order quantity (EOQ)?
a. Less than 560
b. Between 560 and 575
c. Between 575 and 590
d. More than 590
161. Use the information in Table 13.9. Assume demand during lead time to be normally distributed. For a continuous review system, what should be the reorder point (R)?
a. Less than 870
b. Between 870 and 900
c. Between 900 and 930
d. More than 930
162. Use the information in Table 13.9. Design a periodic review system with P = 4 weeks. Assume demand during lead time plus review period to be normally distributed. What target inventory will provide the desired cycle-service level of 85 percent?
a. Less than 1400 units
b. Between 1400 and 1425 units
c. Between 1425 and 1450 units
d. Greater than 1450 units
163. Jan Tuttle is the inventory manager of an art supply store. She uses a periodic review system for all oil paints. The number of periods between orders (P) for red #69 is 15 workdays. (The store operates 50 weeks/year, 5 workdays/week.) Additional information concerning red #69 follows.
Demand = 30 units/workday
Standard deviation of daily demand = 4 units/workday
Lead time = 7 workdays
Desired cycle-service level = 85 percent
A normal table is appended to this exam.
What is the target inventory level T for red #69?
a. Less than or equal to 550
b. Greater than 550 but less than or equal to 600
c. Greater than 600 but less than or equal to 650
d. Greater than 650
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Table 13.10
A firm using the periodic review system (P system) reviews the status of an item every 4 weeks. The standard deviation in weekly demand is 60 units. The lead time for the item is 3 weeks, whereas demand averages 200 units per week. A normal table is appended to this exam.
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164. Use the information in Table 13.10. How much safety stock should be held to achieve a 95 percent cycle service level?
a. Less than 270 units
b. Greater than 270 but less than or equal to 285 units
c. Greater than 285 but less than or equal to 300 units
d. Greater than 300 units
165. Use the information in Table 13.10. Suppose the firm decides on a safety stock (B) of 245 units. It is time to review the item, and the current inventory position is 700 units. How many units should be ordered? (Hint: Before answering this question, you must first compute T, the target inventory level.)
a. Less than 900 units
b. Greater than 900 but less than or equal to 950 units
c. Greater than 950 but less than or equal to 1000 units
d. Greater than 1000 units
Table 13.11
The following information has been collected on an independent demand item:
Demand = 30 units per week
(assume 52 weeks/ year)
Ordering and setup cost = $50 per order
Holding cost = $8 per unit per year
Lead time = 1 week
Standard deviation in weekly demand = 8 units
Cycle-service level = 90 percent
A normal table is appended to this exam.
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166. Use the information from Table 13.11. Design a continuous review system (Q system) for this item, making Q equal to the EOQ. Assume that the demand during lead time is normally distributed. What are the desired values for Q and R?
a. Q is between 138 and 142, while R is between 34 and 38.
b. Q is between 121 and 125, while R is between 80 and 84.
c. Q is between 138 and 142, while R is between 39 and 42.
d. Q is between 121 and 125, while R is between 53 and 57.
167. Use the information from Table 13.11. Design a periodic review system (P system), with P = 5 weeks. What target inventory T will provide the desired 90 percent cycle-service level?
a. Between 53 and 57 units
b. Between 172 and 176 units
c. Between 188 and 192 units
d. Between 202 and 206 units
168. In a waiting line problem, increasing advertising expenditures, increasing the number of promotions, or changing the price of a service is most likely to affect
a. customer arrival rates.
b. service rates.
c. the priority rule.
d. the line arrangement.
169. In a waiting-line problem, assigning additional employees to a service facility will have a direct effect on
a. the line arrangement.
b. service rates.
c. the size of the customer population.
d. the number of service phases.
170. With a single-server model, increasing the service rate holding all other factors constant will
a. increase the utilization of the server.
b. increase the time spent per customer.
c. decrease the probability that there are two customers in the system at any time.
d. decrease the arrival rate of customers.
171. With a single-server model, increasing the promotions for a service through advertising will most likely
a. increase the utilization of the server.
b. decease the average number of customers in the service system.
c. decrease the average time a customer spends in the system.
d. increase the probability that the server will be idle.
172. With a single-server model, increasing the capital-to-labor ratio will most likely
a. increase the utilization of the server.
b. have no effect on the operating characteristics because they are only affected by work methods changes.
c. decrease the probability that there are zero customers in the system at any time.
d. decrease the average number of customers in the waiting line.
173. With a single-server model, increasing the arrival rate by 10% and also increasing the service rate by 10% will result in
a. an increase in the utilization of the server.
b. an increase in the average number of customers in the system.
c. a decrease in the average time spent in the system, including service.
d. an increase in the waiting line time.
174. With a single-server model, increasing the arrival rate by 10% and also increasing the service rate by 10% will result in
a. a decrease in the utilization of the server.
b. no change in the average number of customers in the service system.
c. an increase in the average number of customers in the waiting line.
d. an increase in the waiting time in line.
175. With a single-server model, increasing the arrival rate by 10% and also increasing the service rate by 10% will result in
a. no change in the probability that there are n customers in the system.
b. a decrease in the average waiting time in line.
c. an increase in the average time spent in the system, including service.
d. an increase in the average number of customers in the system.
176. With a multiple-server model, increasing the arrival rate by 10% and also increasing the service rate of each server by 10% will result in
a. a decrease in the utilization of the system.
b. no change in the average number of customers in the waiting line.
c. a decrease in the average number of customers in the waiting line.
d. an increase in the waiting time in line.
177. With a finite-source model, increasing the arrival rate by 10% and also increasing the service rate by 10% will result in
a. an increase in the utilization of the server.
b. an increase in the average number of customers in the service system.
c. a decrease in the average time spent in the system, including service.
d. an increase in the waiting time in line.
178. With a finite-source model, increasing the arrival rate by 10% and also increasing the service rate by 10% will result in
a. a decrease in the utilization of the server.
b. no change in the average number of customers in the system.
c. an increase in the average number of customers in the waiting line.
d. an increase in the waiting time in line.
179. An automatic, drive-through car wash is an example of a
a. single-channel, single-phase arrangement.
b. single-channel, multiple-phase arrangement.
c. multiple-channel, single-phase arrangement.
d. multiple-channel, multiple-phase arrangement.
180. A drive-through system at a McDonald’s restaurant where the first facility takes the order, the second takes the money, and the third provides the food is an example of
a. single-channel, single-phase arrangement.
b. single-channel, multiple-phase arrangement.
c. multiple-channel, single-phase arrangement.
d. multiple-channel, multiple-phase arrangement.
181. A bank lobby with six teller windows each with a separate line is an example of a
a. single-channel, single-phase arrangement.
b. single-channel, multiple-phase arrangement.
c. multiple-channel, single-phase arrangement.
d. multiple-channel, multiple-phase arrangement.
182. A laundromat, where there are washing machines and drying machines, is an example of a
a. single-channel, single-phase arrangement.
b. single-channel, multiple-phase arrangement.
c. multiple-channel, single-phase arrangement.
d. multiple-channel, multiple-phase arrangement.
183. In the single-server model
a. customers are assumed to arrive at constant intervals of time.
b. the variability of customer arrivals is described by a Poisson distribution.
c. the mean of the distribution of customer arrivals must be greater than the variance of customer arrivals to get meaningful results.
d. the probability of n arrivals in T time periods comes from a normal distribution.
184. In the single-server model,
a. the service time of a customer comes from an exponential distribution.
b. the service time depends on the number of customers in the system so long as there is at least one customer in the waiting line.
c. the mean of the service time distribution must be as great as the target service time for a feasible solution.
d. service times are always constant to avoid large waiting lines.
185. A super computer accessory discount store often has customers that leave the checkout line before being served because of excessive waiting times. The store has a(n)
a. infinite customer population with balking customers.
b. infinite customer population with reneging customers.
c. finite customer population with balking customers.
d. finite customer population with reneging customers.
186. A homemade ice cream shop owner has noticed that often potential customers will stop outside the store, assess the wait in line, and then pass by. The shop has a(n)
a. infinite customer population with balking customers.
b. infinite customer population with reneging customers.
c. finite customer population with balking customers.
d. finite customer population with reneging customers.
187. The owner of a desktop publishing company has seven loyal clients who periodically require his services. The owner has
a. an infinite customer population of patient customers.
b. an infinite population of impatient customers.
c. a finite customer population.
d. a finite customer population with balking customers.
188. Customers arrive according to a Poisson distribution. The average number of customer arrivals per hour is 4. The probability that 3 customers will arrive in the next 2 hours is
a. less than or equal to 0.015.
b. greater than 0.015 but less than or equal to 0.020.
c. greater than 0.020 but less than or equal to 0.025.
d. greater than 0.025.
189. Customers arrive according to a Poisson distribution. The average number of customer arrivals per hour is 6. The probability that 4 customers will arrive in the next 3 hours is
a. less than or equal to 0.01.
b. greater than 0.01 but less than or equal to 0.02.
c. greater than 0.02 but less than or equal to 0.03.
d. greater than 0.03.
190. Customers arrive according to a Poisson distribution. The average number of customer arrivals per hour is 3. The probability that 4 customers will arrive in the next 2 hours is
a. less than or equal to 0.10.
b. greater than 0.10 but less than or equal to 0.12.
c. greater than 0.12 but less than or equal to 0.14.
d. greater than 0.14.
c(Probability Distributions, moderate)
191. Customers arrive according to a Poisson distribution. The average number of customer arrivals per hour is 2. The probability that 5 customers will arrive in the next 3 hours is
a. less than or equal to 0.10.
b. greater than 0.10 but less than or equal to 0.12.
c. greater than 0.12 but less than or equal to 0.14.
d. greater than 0.14.
192. Customers are serviced at a rate of 4 customers per hour according to an exponential distribution. What is the probability that a customer will require less than 30 minutes?
a. Less than or equal to 0.50
b. Greater than 0.50 but less than or equal to 0.60
c. Greater than 0.60 but less than or equal to 0.70
d. Greater than 0.70
193. Customers are serviced at a rate of 6 customers per hour according to an exponential distribution. What is the probability that a customer will require less than 20 minutes?
a. Less than or equal to 0.70
b. Greater than 0.70 but less than or equal to 0.80
c. Greater than 0.80 but less than or equal to 0.90
d. Greater than 0.90
194. Customers are serviced at a rate of 3 customers per hour according to an exponential distribution. What is the probability that a customer will require less than 10 minutes?
a. Less than or equal to 0.40
b. Greater than 0.40 but less than or equal to 0.45
c. Greater than 0.45 but less than or equal to 0.50
d. Greater than 0.50
195. Customers are serviced at a rate of 5 customers per hour according to an exponential distribution. What is the probability that a customer will require less than 20 minutes?
a. Less than or equal to 0.75
b. Greater than 0.75 but less than or equal to 0.80
c. Greater than 0.80 but less than or equal to 0.85
d. Greater than 0.85
196. Customers are serviced at a rate of 10 customers per hour according to an exponential distribution. What is the probability that a customer will require less than 2 minutes?
a. Less than or equal to 0.25
b. Greater than 0.25 but less than or equal to 0.30
c. Greater than 0.30 but less than or equal to 0.35
d. Greater than 0.35
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Table C.1
The athletic boosters club at Southville High plans a car wash to raise funds for the sports program. An average of 10 cars per hour are expected to arrive according to a Poisson distribution. They will be served at an average rate of 12 cars per hour, with exponential service times.
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197. Use the information in Table C.1. What is the average utilization of the car wash operation?
a. Less than or equal to 75%
b. Greater than 75% but less than or equal to 80%
c. Greater than 80% but less than or equal to 85%
d. Greater than 85%
198. Use the information in Table C.1. What is the average number of cars in the system?
a. Less than or equal to 4
b. Greater than 4 but less than or equal to 5
c. Greater than 5 but less than or equal to 6
d. Greater than 6
199. Use the Information in Table C.1. What is the average number of cars in line?
a. Less than or equal to 5
b. Greater than 5 but less than or equal to 6
c. Greater than 6 but less than or equal to 7
d. Greater than 7
200. Use the information in Table C.1. What is the average time spent in the system?
a. Less than or equal to 0.35 hour
b. Greater than 0.35 hour but less than or equal to 0.40 hour
c. Greater than 0.40 hour but less than or equal to 0.45 hour
d. Greater than 0.45 hour
201. Use the information in Table C.1. What is the average time spent in line?
a. Less than or equal to 20 minutes
b. Greater than 20 minutes but less than or equal to 30 minutes
c. Greater than 30 minutes but less than or equal to 40 minutes
d. Greater than 40 minutes
202. Use the information in Table C.1. What is the probability of having more than 3 cars in the system?
a. Less than or equal to 0.45
b. Greater than 0.45 but less than or equal to 0.50
c. Greater than 0.50 but less than or equal to 0.55
d. Greater than 0.55
Table C.2
A young entrepreneur wants to set up a lemonade stand at a busy intersection. Customers arrive at a rate of 40 per hour according to a Poisson distribution. Customers will be served at the average rate of 60 per hour with exponential service times.
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203. Use the information in Table C.2. What is the average utilization of the entrepreneur?
a. Less than or equal to 50%
b. Greater than 50% but less than or equal to 60%
c. Greater than 60% but less than or equal to 70%
d. Greater than 70%
204. Use the information in Table C.2. What is the average number of customers in the system?
a. Less than or equal to 1
b. Greater than 1 but less than or equal to 2
c. Greater than 2 but less than or equal to 3
d. Greater than 3
205. Use the information in Table C.2. What is the average number of customers in line?
a. Less than or equal to 1
b. Greater than 1 but less than or equal to 2
c. Greater than 2 but less than or equal to 3
d. Greater than 3
206. Use the information in Table C.2. What is the average time spent in the system?
a. Less than or equal to 1 minute
b. Greater than 1 minute but less than or equal to 2 minutes
c. Greater than 2 minutes but less than or equal to 3 minutes
d. Greater than 3 minutes
207. Use the information in Table C.2. What is the average time spent in line?
a. Less than or equal to 1.5 minutes
b. Greater than 1.5 minutes but less than or equal to 2.5 minutes
c. Greater than 2.5 minutes but less than or equal to 3.5 minutes
d. Greater than 3.5 minutes
208. Use the information in Table C.2. What is the probability of having more than 2 customers in the system?
a. Less than or equal to 0.35
b. Greater than 0.35 but less than or equal to 0.40
c. Greater than 0.40 but less than or equal to 0.45
d. Greater than 0.45
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Table C.3
Customers arrive at a bank’s facility at the rate of 40 per hour, according to a Poisson distribution. There are 2 separate teller windows, each one capable of serving 30 customers per hour on the average with exponential service times. Customers form one line, going to the first available teller.
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209. Use the information in Table C.3. What is the average utilization of the two-window system?
a. Less than or equal to 50%
b. Greater than 50% but less than or equal to 60%
c. Greater than 60% but less than or equal to 70%
d. Greater than 70%
210. Use the information in Table C.3. What is the average number of customers waiting in line for service?
a. Less than or equal to 2
b. Greater than 2 but less than or equal to 3
c. Greater than 3 but less than or equal to 4
d. Greater than 4
211. Use the information in Table C.3. What is the average waiting time in line?
a. Less than or equal to 1 minute
b. Greater than 1 minute but less than or equal to 1.5 minutes
c. Greater than 1.5 minutes but less than or equal to 2 minutes
d. Greater than 2 minutes
212. Use the information in Table C.3. What is the average time spent in the system?
a. Less than or equal to 2 minutes
b. Greater than 2 minutes but less than or equal to 2.5 minutes
c. Greater than 2.5 minutes but less than or equal to 3 minutes
d. Greater than 3 minutes
213. Use the information in Table C.3. What is the average number of customers in the system?
a. Less than or equal to 2
b. Greater than 2 but less than or equal to 2.5
c. Greater than 2.5 but less than or equal to 3
d. greater than 3
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Table C.4
Customers arrive at a ticket counter at the rate of 50 customers per hour, according to a Poisson distribution. There are 3 ticket agents. Customers select the first available agent from one line. Each agent can process 20 customers per hour with exponential service. times.
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214. Use the information in Table C.4. What is the average utilization of the three-agent system?
a. Less than or equal to 80%
b. Greater than 80% but less than or equal to 85%
c. Greater than 85% but less than or equal to 90%
d. Greater than 90%
215. Use the information in Table C.4. What is the average number of customers waiting in line for service?
a. Less than or equal to 4
b. Greater than 4 but less than or equal to 4.5
c. Greater than 4.5 but less than or equal to 5
d. Greater than 5
216. Use the information in Table C.4. What is the average waiting time in line?
a. Less than or equal to 3.5 minutes
b. Greater than 3.5 minutes but less than or equal to 4.5 minutes
c. Greater than 4.5 minutes but less than or equal to 5.5 minutes
d. Greater than 5.5 minutes
217. Use the information in Table C.4. What is the average time spent in the system?
a. Less than or equal to 6.5 minutes
b. Greater than 6.5 minutes but less than or equal to 7.5 minutes
c. Greater than 7.5 minutes but less than or equal to 8.5 minutes
d. Greater than 8.5 minutes
Table C.5
A trucking firm has 5 trucks that each requires service at an average rate of once every 50 hours, according to an exponential distribution. The firm has a mechanic who needs 5 hours to complete the average job with exponential service times.
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218. Use the information in Table C.5. What is the probability that there will be no trucks in the system?
a. Less than or equal to 0.50
b. Greater than 0.50 but less than or equal to 0.60
c. Greater than 0.60 but less than or equal to 0.70
d. Greater than 0.70
219. Use the information in Table C.5. What is the average utilization of the mechanic?
a. Less than or equal to 50%
b. Greater than 50% but less than or equal to 60%
c. Greater than 60% but less than or equal to 70%
d. Greater than 70%
220. Use the information in Table C.5. What is the average number of trucks waiting for service?
a. Less than or equal to 0.10
b. Greater than 0.10 but less than or equal to 0.14
c. Greater than 0.14 but less than or equal to 0.18
d. Greater than 0.18
221. Use the information in Table C.5. What is the average number of trucks in line waiting and being serviced?
a. Less than or equal to 0.30 trucks
b. Greater than 0.30 trucks but less than or equal to 0.40 trucks
c. Greater than 0.40 trucks but less than or equal to 0.50 trucks
d. Greater than 0.50 trucks
222. Use the information in Table C.5. What is the average waiting time of trucks in line?
a. Less than or equal to 1.5 hours
b. Greater than 1.5 hours but less than or equal to 1.7 hours
c. Greater than 1.7 hours bur less than or equal to 1.9 hours
d. Greater than 1.9 hours
223. Use the information in Table C.5. What is the average time that a truck spends in the system?
a. Less than or equal to 6.5 hours
b. Greater than 6.5 hours but less than or equal to 7.0 hours
c. Greater than 7.0 hours but less than or equal to 7.5 hours
d. Greater than 7.5 hours
Table C.6
The Jackson Machine Company has 4 cutting tools that need to be refurbished after an average of 30 hours, according to an exponential distribution. The machine that refurbishes the tools needs 15 hours for each tool on the average, with exponential service times.
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224. Use the information in Table C.6. What is the probability that there will be no tools in the system?
a. Less than or equal to 0.09
b. Greater than 0.09 but less than or equal to 0.13
c. Greater than 0.13 but less than or equal to 0.17
d. Greater than 0.17
225. Use the information in Table C.6. What is the average utilization of the refurbishing machine?
a. Less than or equal to 40%?
b. Greater than 40% but less than or equal to 50%
c. Greater than 50% but less than or equal to 60%
d. Greater than 60%
226. Use the information in Table C.6. What is the average number of tools waiting for service?
a. Less than or equal to 2.0
b. Greater than 2.0 but less than or equal to 2.5
c. Greater than 2.5 but less than or equal to 3.0
d. Greater than 3.0
227. Use the information in Table C.6. What is the average number of tools waiting in line and being serviced?
a. Less than or equal to 2.0
b. Greater than 2.0 but less than or equal to 2.5
c. Greater than 2.5 but less than or equal to 3.0
d. Greater than 3.0
228. Use the information in Table C.6. What is the average waiting time of tools in line?
a. Less than or equal to 15 hours
b. Greater than 15 hours but less than or equal to 25 hours
c. Greater than 25 hours but less than or equal to 35 hours
d. Greater than 35 hours
229. Use the information in Table C.6. What is the average time that a tool spends in the system?
a. Less than or equal to 20 hours
b. Greater than 20 hours but less than or equal to 30 hours
c. Greater than 30 hours but less than or equal to 40 hours
d. Greater than 40 hours
230. Which one of the following situations is more appropriate for the application of project management?
a. When none of the tasks involved in the project can be done simultaneously.
b. The need for coordination among various functional areas is high.
c. The need for coordination among various functional areas is low.
d. The project is guaranteed to be successful.
231. Before beginning to create a PERT/CPM network model for a project, the project must be described in general terms. Two types of information that must be defined are
a. slack time and activities.
b. manpower allocation and project due date.
c. crash times and manpower allocation.
d. activities and precedence relationships.
232. In an activity-on-node (AON) network, the nodes represent __________ whereas the arcs represent __________.
a. activities; time
b. activities; precedence relationships
c. events; activities
d. precedence relationships; time
233. In a network diagram, an “activity”
a. is the largest unit of work effort consuming both time and resources that a project manager can schedule and control.
b. is the smallest unit of work effort consuming both time and resources that a project manager can schedule and control.
c. should always be something the company has had experience with.
d. must always have a single, precise estimate for the time duration.
234. Which one of the following statements about network diagrams is TRUE?
a. In an activity-on-node diagram, the nodes depict precedence relationships as well as activities.
b. In an activity-on-arc diagram, the arcs depict the activities as well as the precedence relationships.
c. In an activity-on-node diagram, “events” are used to denote the end points of arcs.
d. In an activity-on-arc diagram, there is never a need to use “dummy” activities.
235. Activity C cannot begin until both activities A and B have been completed. Activity D cannot begin until activity B has been completed. Which one of the following statements is TRUE?
a. A dummy activity is needed if the AOA approach is used.
b. The AOA approach cannot be used at all.
c. The AON approach would require more nodes than the AOA approach for these relationships.
d. The AON approach would require more arcs than the AOA approach for these relationships.
236. A project has three paths. A-B-C has a length of 25 days. A-D-C has a length of 15 days. Finally, A-E-C has a length of 20 days. Which one of the following statements is TRUE?
a. A-D-C is the critical path.
b. A-B-C has the most slack.
c. The expected duration of this project is 25 days.
d. The expected duration of this project is 25 + 15 + 20 = 60 days.
237. The earliest start time for an activity is equal to the
a. smallest earliest finish time of all of its immediate predecessors.
b. largest earliest finish time of all of its immediate predecessors.
c. smallest late start time of any of its immediate predecessors.
d. largest late finish time of all of its immediate predecessors.
238. Assume that activity G has the following times:
Early start time = 7 days
Early finish time = 13 days
Late start time = 15 days
Late finish time = 21 days
Which of the following statements is TRUE about activity G?
a. Activity G takes 14 days to complete.
b. Activity G has a slack time of 8 days.
c. Activity G is on the critical path.
d. Activity G takes 2 days to complete.
239. Activity slack is defined as
a. latest start time minus earliest start time.
b. earliest start time minus latest start time.
c. earliest finish time minus latest finish time.
d. latest finish time minus earliest start time.
240. Which one of the following best describes the critical path of a PERT/CPM network?
a. The sequence of activities between a project’s start and finish that takes the longest time to complete
b. The sequence of activities between a project’s start and finish that has the maximum amount of activity slack
c. The set of activities that has no precedence relationships
d. The sequence of activities that has the lowest normal activity cost
241. When using the beta probability distribution to estimate activity times, which of the following statements is TRUE?
a. The project manager is usually the only person involved in making time estimates, as obtaining estimates from workers involved in the activities would result in inconsistent estimates.
b. The beta distribution is used as a way of approximating a normal probability distribution for time estimates.
c. The use of most optimistic, most likely, and most pessimistic times for an activity will result in a determination of the expected times for that activity.
d. The larger the difference between most pessimistic time and most optimistic time for an activity, the smaller will be the variance of that time estimate.
242. When using the beta distribution for estimating activity times,
a. an advantage is that the mode of the distribution is always equidistant from the end points of the distribution.
b. the most likely time estimate can be positioned anywhere between the optimistic and pessimistic time estimates.
c. we assume that the standard deviation is one-third the range between the optimistic and pessimistic time estimates.
d. the most likely time estimate becomes the mean of the distribution.
243. Following are four sets of most optimistic, most likely, and most pessimistic times (in weeks) for an activity. Which one of the four sets will have a mean estimated time equal to the most likely time?
a. 1, 9, 9
b. 1, 5, 9
c. 1, 1, 9
d. 1, 5, 5
244. To calculate the probability of completing a project by a certain date,
a. the expected completion time of the project is taken to be the sum of the activity times on the shortest path.
b. the variance of the distribution of project completion times is taken to be one-sixth the difference between the latest finish time and the earliest finish time of the last activity in the project.
c. we assume that the activity durations are independent of each other so that the normal distribution can be used.
d. we only need the parameters of the beta distribution for the finish node of the diagram.
245. If a project has multiple critical paths, which of the following variances should be used in analyzing project completion time probabilities?
a. The critical path with the smallest variance
b. The critical path with the largest variance
c. The sum of the variances for all critical paths
d. The average variance of the critical paths
246. Which one of the following statements concerning project costs is TRUE?
a. The direct costs for the critical path will always be higher than for any other path.
b. The direct costs for the critical path will always be lower than for any other path.
c. Penalty costs are incurred when a project is crashed, thus reducing total project time.
d. Indirect costs can get smaller as the total project time is reduced.
247. Crash time is best defined as
a. the time needed to complete the shortest activity in a network.
b. the shortest time needed to complete a particular activity.
c. the difference between the late start time and the early start time.
d. the amount of slack for a particular activity.
248. Which one of the following statements concerning cost considerations in project management is TRUE?
a. The minimum-cost schedule may include activities that have been crashed at additional expense.
b. The best schedule will be the one that finishes the project in the least amount of time.
c. If the minimum-cost schedule is determined correctly, there will never be more than one critical path.
d. The minimum-cost schedule will never incur penalty costs.
249. If a project has exactly one critical path, which one of the following statements is TRUE?
a. Crashing an activity on the critical path will always result in an increase in total project profits.
b. Activities on the critical path cannot be crashed.
c. Crashing an activity on the critical path will always result in a reduced total project completion time.
d. The best schedule is one in which all activities are crashed as much as possible.
250. Which one of the following conditions violates the assumptions of PERT/CPM networks?
a. Some activities can have zero variance.
b. Costs increase linearly as activity time is reduced below its normal time.
c. Two activities tied together by an arc are overlapping and can be worked on simultaneously.
d. There can be more than one critical path in a network.
251. Which one of the following statements is TRUE?
a. The path in a network having the minimum slack is the shortest path in the network.
b. There is never more than one critical path in a network.
c. Crashing an activity on the critical path will always result in an increase in total project profits.
d. PERT/CPM assumes that two activities tied together by a precedence relationship cannot be worked on simultaneously.
252. In making an estimate of the most pessimistic time for an activity, a manager deliberately estimates this time too high (i.e., longer than it should be). What is the result of this action, assuming the beta distribution is being used to make time estimates?
a. The most likely time for this activity will be larger than it should be.
b. The variance of the activity will be smaller than it should be.
c. The beta distribution will be symmetric around its mean.
d. The expected time for this activity will be larger than it should be.
Table 4.1
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253. Using Table 4.1, what is the earliest expected time of completion of the whole project?
a. Less than or equal to 19 weeks
b. Greater than 19 but less than or equal to 21 weeks
c. Greater than 21 but less than or equal to 24 weeks
d. Greater than 24 weeks
254. Using Table 4.1, which activity will have the largest amount of slack?
a. Activity F
b. Activity C
c. Activity H
d. Activity A
255. Using Table 4.1, if the expected times for activities A, G, and H increased by 2, 3, and 4 weeks, respectively, by how many weeks would the project’s earliest expected time of completion increase?
a. Less than or equal to 2 weeks
b. Greater than 2 weeks but less than or equal to 4 weeks
c. Greater than 4 weeks but less than or equal to 6 weeks
d. Greater than 6 weeks
Table 4.2
|
|
|
|
Time (weeks)
|
|
Activity
|
Immediate Predecessor(s)
|
Most
Optimistic
|
Most
Likely
|
Most
Pessimistic
|
|
A
|
—
|
2
|
4
|
6
|
|
B
|
—
|
1
|
4
|
7
|
|
C
|
A
|
2
|
2
|
2
|
|
D
|
B
|
1
|
7
|
10
|
|
E
|
D
|
2
|
4
|
6
|
|
F
|
E
|
1
|
2
|
3
|
|
G
|
C
|
3
|
4
|
17
|
|
H
|
D,G
|
3
|
7
|
11
|
|
I
|
D
|
8
|
9
|
10
|
|
J
|
F,H
|
4
|
5
|
6
|
|
K
|
I
|
1
|
1
|
1
|
256. Using Table 4.2, what is the earliest expected time of completion of the whole project?
a. Less than or equal to 21 days
b. Greater than 21 but less than or equal to 22 days
c. Greater than 22 but less than or equal to 23 days
d. Greater than 23 days
257. Using Table 4.2, which activity is on the critical path?
a. Activity D
b. Activity F
c. Activity G
d. Activity K
258. Using Table 4.2, if the project is due to be completed in 28 days, what is the probability that the project will be completed on or before the due date?
a. Less than or equal to 75%
b. Greater than 75% but less than or equal to 85%
c. Greater than 85% but less than or equal to 95%
d. Greater than 95%
259. If the project manager wants at least a 98% probability that the project will be completed on or before the due date, what is the shortest project due date that will satisfy the manager?
a. less than or equal to 28 days
b. greater than 28 days but less than or equal to 30 days
c. greater than 30 days but less than or equal to 32 days
d. greater than 32 days
Table 4.3
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260. Using Table 4.3, what is the earliest completion time for this project?
a. 9 weeks
b. 12 weeks
c. 15 weeks
d. None of the above
261. Using Table 4.3, what is the largest amount of slack that any activity in the project has?
a. 0 weeks
b. 1 week
c. 2 weeks
d. 3 or more weeks
262. Using Table 4.3, what is the minimum number of activities that would have to be delayed in order to cause an increase in the project’s earliest completion date?
a. 1 activity
b. 2 activities
c. 3 activities
d. 4 or more activities
263. Using Table 4.3, what is the minimum number of activities that would have to be crashed in order to cause a decrease in the project’s earliest completion date?
a. 1 activity
b. 2 activities
c. 3 activities
d. 4 or more activities
Table 4.4
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264. Using Table 4.4, the expected time to complete the whole project is
a. less than 12 days.
b. 12 days.
c. 14 days.
d. more than 14 days.
265. Using Table 4.4, what is the latest finish time for activity D?
a. 4 days
b. 6 days
c. 8 days
d. 10 days
266. Using Table 4.4, of the following activities, which one has a slack value greater than zero days?
a. Activity B
b. Activity C
c. Activity K
d. Activity N
Table 4.5
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267. Using Table 4.5, what is the earliest completion time of this project?
a. Less than or equal to 12 weeks
b. Greater than 12 weeks but less than or equal to 14 weeks
c. Greater than 14 weeks but less than or equal to 16 weeks
d. Greater than 16 weeks
268. Using Table 4.5, what is the critical path of this project?
a. A-C-G
b. B-C-G
c. A-C-E-F
d. A-D-F
269. Using Table 4.5, how many weeks can activity B be delayed without changing the whole project’s earliest completion time?
a. 0 weeks
b. 1 week
c. 2 weeks
d. 3 weeks
Table 4.6
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270. Using Table 4.6, what is the earliest completion time of the project?
a. Less than or equal to 25 weeks
b. Greater than 25 weeks but less than or equal to 30 weeks
c. Greater than 30 weeks but less than or equal to 35 weeks
d. Greater than 35 weeks
271. Using Table 4.6, what is the slack for activity G?
a. 9 weeks
b. 21 weeks
c. 23 weeks
d. 30 weeks
Table 4.7
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272. Using Table 4.7, what is the critical path for this project?
a. B-E-H-K
b. B-E-H-J
c. A-E-G-J
d. C-F-I-L
273. Using Table 4.7, suppose activity D can be shortened from 4 days to 1 day. Assume all other activity times remain the same. How much shorter will the total project earliest completion time become?
a. 0 days
b. 1 day
c. 2 days
d. 3 days
274. Using Table 4.7, suppose activity I is delayed, taking 8 days to complete instead of 2 days. Assume all other activity times remain the same. How much longer will the total project earliest completion time become?
a. 0 days
b. 1 or 2 days
c. 3 or 4 days
d. 5 or 6 days
275. Using Table 4.7, what is the latest start time for activity A?
a. Day 0
b. Day 1
c. Day 2
d. Day 3 or later
Table 4.8
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276. Using Table 4.8, what is the earliest completion time of the project?
a. Less than or equal to 10 weeks
b. Greater than 10 weeks but less than or equal to 13 weeks
c. Greater than 13 weeks but less than or equal to 16 weeks
d. Greater than 16 weeks
277. Using Table 4.8, what is the critical path of the above project?
a. B-C-E-F
b. B-C-F
c. A-D-F
d. A-C-E-F
278. Using Table 4.8, what is the slack for activity A?
a. 0 weeks
b. 1 week
c. 2 weeks
d. 3 or more weeks
Table 4.9
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279. Using Table 4.9, what is the critical path for this project?
a. A-C-F
b. A-E
c. B-F
d. B-D-E
280. Using Table 4.9, what is the latest finish time of activity B?
a. 1 week
b. 2 weeks
c. 3 weeks
d. 4 or more weeks
281. Using Table 4.9, if the project must be completed in 10 weeks, and assuming all activities (except C) are available to be crashed, which one of the following actions should be taken?
a. Crash activity B by 1 week
b. Crash activity D by 1 week
c. Crash activity A by 1 week
d. Crash activity F by 1 week
282. Using Table 4.9, if the project must be completed in 9 weeks, and assuming all activities (except C) are available to be crashed, which one of the following actions is most appropriate?
a. Crash activity B by 2 weeks
b. Crash activity E by 2 weeks
c. Crash activity E by 1 week and activity B by 1 week
d. Crash activity D by 2 weeks
Table 4.10
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283. Using Table 4.10, what is the earliest completion time of this project?
a. Less than 11 weeks
b. 11 weeks
c. 12 weeks
d. More than 12 weeks
284. Using Table 4.10, if activity B is crashed by 2 weeks, what is the new earliest completion time of the project?
a. Less than 11 weeks
b. 11 weeks
c. 12 weeks
d. More than 12 weeks
285. Using Table 4.10, and assuming all activities except D, F, H, and K are available to be crashed, what is the minimum cost to be incurred in reducing the total project earliest completion time by 1 week?
a. $3,000
b. $6,000
c. $8,000
d. $10,000
Table 4.11
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286. Using Table 4.11, what is the earliest completion time of this project if normal times are used for all activities?
a. Less than 13 weeks
b. 13 weeks
c. 14 weeks
d. More than 14 weeks
287. Using Table 4.11, what is the minimum time schedule for this project?
a. Less than 8 weeks
b. 8 weeks
c. 9 weeks
d. More than 9 weeks
288. Using Table 4.11, if the project completion time has to be reduced by 1 week, which of the following activities should be crashed in order to minimize the extra cost of earlier completion?
a. Activity B
b. Activity E
c. Activity H
d. Activity J
289. Using Table 4.11, what is the difference, in dollars, between the minimum-time schedule and the schedule created by crashing all activities to their limits? Assume that there are no indirect or penalty costs.
a. Less than or equal to $1000
b. Greater than $1000 but less than or equal to $2000
c. Greater than $2000 but less than or equal to $3000
d. Greater than $3000
290. Using Table 4.11, if the project’s normal earliest completion time is to be reduced by 2 weeks, what is the minimum additional cost that will be incurred in achieving this 2-week reduction?
a. Less than or equal to $1000
b. Greater than $1000 but less than or equal to $1500
c. Greater than $1500 but less than or equal to $2000
d. Greater than $2000
Table 4.12
All activity times for the project are in weeks.
![]()
291. Using Table 4.12, what is the critical path of this project?
a. A-C-F-H
b. B-D-F-H
c. B-D-G
d. B-E-G
292. Using Table 4.12, what is the expected time of completion of the project?
a. Less than 22 weeks
b. 22 weeks
c. 23 weeks
d. Greater than 23 weeks
293. Using Table 4.12, what is the probability that the project will be completed in 24 weeks or less?
a. Less than or equal to 55%
b. Greater than 55% but less than or equal to 65%
c. Greater than 65% but less than or equal to 75%
d. Greater than 75%
294. Using Table 4.12, if the expected time for activity E is changed to 9 weeks, by how many weeks will the project’s expected completion time increase?
a. It will not change.
b. It will increase by 1 week.
c. It will increase by 2 weeks.
d. It will increase by 3 or more weeks.
Table 4.13
You are responsible for managing a project with the following activities (times are given in weeks).
![]()
295. Using Table 4.13, what is the critical path and expected completion time for this project?
a. A-D-E; 17 weeks
b. A-C; 18 weeks
c. B-E; 14 weeks
d. A-D-E; 18 weeks
296. Using Table 4.13, which activity has the largest slack, and how large is that slack?
a. Activity C; 5 weeks
b. Activity A; 6 weeks
c. Activity B; 4 weeks
d. Activity E; 3 weeks
297. Using Table 4.13, what is the probability of completing the project in 17 weeks or less?
a. Less than or equal to 40%
b. Greater than 40% but less than or equal to 55%
c. Greater than 55% but less than or equal to 70%
d. Greater than 70%
298. Using Table 4.13, what is the probability that the project will take 16 or more weeks to complete?
a. Less than or equal to 40%
b. Greater than 40% but less than or equal to 55%
c. Greater than 55% but less than or equal to 70%
d. Greater than 70%
299. Using Table 4.13, if the expected time for activity B is changed to 18 weeks, by how many weeks will the project’s expected completion time increase?
a. It will not change.
b. It will increase by 1 or 2 weeks.
c. It will increase by 3 or 4 weeks.
d. It will increase by more than 4 weeks.
Table 4.14
You are responsible for managing a project with the following activities (times are given in days).
![]()
300. Using, Table 4.14, what is the critical path and expected completion time for this project?
a. A-F; 12 days
b. A-D-G; 12 days
c. B-G; 10 days
d. C-E-G; 8 days
301. Using, Table 4.14, which of the following activities has the largest amount of slack?
a. Activity B
b. Activity D
c. Activity E
d. Activity F
Table 4.15
You are responsible for managing a project with the following activities (times are given in weeks).
![]()
302. Using Table 4.15, what is the critical path for this network?
a. A-C-F-H
b. A-D-F-H
c. B-D-G-H
d. B-E-G-H
303. Using Table 4.15, which of the following activities has the largest amount of slack?
a. Activity C
b. Activity D
c. Activity E
d. Activity H
304. Using Table 4.15, if the expected time for activity D is increased to 6 weeks, by how many weeks will the project’s expected completion time increase?
a. It will not increase.
b. It will increase by 1 week.
c. It will increase by 2 weeks.
d. It will increase by more than 2 weeks.
Table 4.16
You are responsible for managing a project with the following activities (times are given in weeks).
![]()
305. Using Table 4.16, what are the critical path and the expected completion time for this project?
a. A-C-E-G; 33 weeks
b. B-D-F-G; 33 weeks
c. B-C-E-G; 35 weeks
d. B-C-F-H; 34 weeks
306. Using Table 4.16, if the expected time for activity E is decreased to 8 weeks, what is the new expected completion time for the project?
a. 31 weeks or less
b. 32-33 weeks
c. 34-35 weeks
d. More than 35 weeks
307. Assuming a beta distribution is being used, if the most optimistic time for an activity decreases by 12 days, what will happen to the expected time for that activity?
a. It will increase by 2 days.
b. It will decrease by 2 days.
c. It will decrease by 12 days.
d. It will remain the same.
308. Assuming a beta distribution is being used, if the most pessimistic time for an activity increases by 6 weeks, what will happen to the expected time for that activity?
a. It will increase by 1 week
b. It will decrease by 1 week.
c. It will increase by 6 weeks.
d. It will remain the same.
309. The probability that a project will be completed by its earliest expected completion date is
a. 50 percent.
b. 95 percent.
c. 100 percent.
d. impossible to determine.
310. If the sum of the variances on the critical path (and all other network paths) is equal to zero, what is the probability that the project will be completed by its earliest expected completion date?
a. 50 percent
b. 95 percent
c. 100 percent
d. It cannot be determined.
311. A project is currently scheduled to be finished on its normal earliest completion date. The project manager has the opportunity to earn a bonus if the project can be completed three weeks ahead of schedule. The increase in project direct costs related to crashing activities would be $40,000. Also, project indirect costs are $15,000 per week. What is the smallest bonus that the project manager should accept if he or she wants to avoid increasing overall project costs.
a. Less than or equal to $5000
b. Greater than $5000 but less than or equal to $10,000
c. Greater than $10,000 but less than or equal to $15,000
d. Greater than $15,000
312. You are given the following information about activity A:
Normal time = 9 weeks
Crash time = 7 weeks
Normal cost = $20,000
Crash cost = $30,000
What will it cost to complete activity A in 8 weeks?
a. Less than or equal to $24,000
b. Greater than $24,000 but less than or equal to $27,000
c. Greater than $27,000 but less than or equal to $30,000
d. Greater than $30,000
313. You are given the following information about activity B:
Normal time = 9 weeks
Crash time = 5 weeks
Cost to crash per week = $2000
Crash cost = $41,000
What will it cost to complete activity B in 6 weeks?
a. Less than or equal to $34,000
b. Greater than $34,000 but less than or equal to $36,000
c. Greater than $36,000 but less than or equal to $38,000
d. Greater than $38,000
314. You are given the following information about activity F:
Normal time = 16 weeks
Crash time = 10 weeks
Crash cost = $45,000
Cost to crash per week = $2,000
What is the normal cost for activity F?
a. Greater than or equal to $55,000
b. Less than $55,000 but greater than or equal to $47,000
c. Less than $47,000 but greater than or equal to $40,000
d. Less than $40,000
Table 4.17
![]()
Indirect costs are $10,000 per week, and a penalty cost of $10,000 per week will be incurred for every week past week 9 until the project is completed.
315. Using Table 4.17, what is the shortest time duration for this project?
a. Less than 8 weeks
b. 8 weeks
c. 9 weeks
d. More than 9 weeks
316. Using Table 4.17, what is the total cost associated with completing the project in 12 weeks?
a. Less than or equal to $160,000
b. Greater than $160,000 but less than or equal to $200,000
c. Greater than $200,000 but less than or equal to $240,000
d. Greater than $240,000
317. Using Table 4.17, what will be the total time of the minimum-cost schedule?
a. 8 weeks or less
b. 9 weeks
c. 10 weeks
d. 11 weeks or more
318. A company could add $10,000 per week in revenues if the project depicted in Table 4.18 could be shortened.
Table 4.18
![]()
There exist four possible options to crash activities: crash A by one week at a cost of $6000; crash C by two weeks at a cost of $15,000; crash E by one week at a cost of $2000; and crash I one week at a cost of $7000. What is the maximum amount of additional profit that can be made by crashing an option (or options)?
a. Less than or equal to $4000
b. Greater than $4000 but less than or equal to $8000
c. Greater than $8000 but less than or equal to $12,000
d. Greater than $12,000
Table 4.19
![]()
319. Using Table 4.19, what is the minimum-time schedule for this project?
a. Less than or equal to 8 weeks
b. Greater than 8 but less than or equal to 10 weeks
c. Greater than 10 but less than or equal to 12 weeks
d. Greater than 12 weeks
320. Using Table 4.19, what is the difference, in dollars, between the minimum-time schedule and the schedule created by crashing all activities to their limits? Assume that there are no indirect or penalty costs.
a. Less than or equal to $2000
b. Greater than $2000 but less than or equal to $3000
c. Greater than $3000 but less than or equal to $4000
d. Greater than $4000
321. Using Table 4.19, if indirect costs are $3000 per week and penalty costs are $0, what would be the difference in total project costs between the normal earliest completion time schedule and the minimum-time schedule?
a. Less than or equal to $5000
b. Greater than $5000 but less than or equal to $10,000
c. Greater than $10,000 but less than or equal to $15,000
d. Greater than $15,000
