Economic order quantity free essay sample

1. Which of the following statements about learning curves is generally TRUE? a. management can dictate achievement of a certain rate of learning. b. learning curves were first quantified by Frank Lillian Gilbreth. c. using the â€Å"doubling† model, a learning curve of 70% means the 20th unit takes 70% of the time that the 10th unit will take. d. learning curves are a recognition of the concept that the cost of each produced unit usually decreases with experience. 2. Which of the following is an assumption of learning curves? a. the cumulative time of production increases as production increases. b. time reduction per unit increases as cumulative production increases. c. the same learning curve should be used when a company increases its level of automation. d. the reduction in time per unit follows a positive exponential curve. 3. A firm has just begun production of a new government contract for 1000 infrared cameras. The 1st camera took 500 hours to produce. If the rate of learning is eighty-seven percent ( 87% ), how much time should the 175th camera take to produce? a. less than or equal to 100 hours. b. greater than 100 hours but less than or equal to 125 hours. c. greater than 125 hours but less than or equal to 150 hours. d. greater than 150 hours. 4. Which of the following is NOT true about small batch sizes in JIT systems? a. they increase each setup time. b. they reduce the average level of inventory. c. they allow for the early detection of any quality problems. d. they improve the utilization of system capacity. 5. Which one of the following is an advantage of JIT systems? a. JIT systems reduce equipment needs by using larger lot sizes. b. JIT systems can be easily implemented in any operations environment. c. JIT systems result in a decrease in safety stock and work-in-process inventory. d. JIT systems result in an increase in manufacturing lead times. 6. Companies utilizing JIT systems generally have: a. suppliers who are low-cost producers. b. suppliers that are willing to accept short-term contracts. c. suppliers that are located nearby to decrease delivery lead time. d. many suppliers to assure that material shortages never occur. 7. The definition of â€Å"little† JIT is a ( an ) : a. management system of people and procedures to fulfill all product delivery deadlines. b. production system of small-lot manufacturing to reduce work-in-process inventory. c. materials management system for removing 100% of all inventories. d. integrated system of managing resources, information, and decision processes to eliminate waste throughout the supply chain. 8. In one particular version of the kanban system, a move card ( or equivalent ) is used to signal that: a. materials are needed from an outside vendor. b. a machine has broken down. c. the assembly line is ready to be balanced. d. assemblies or components are needed from the preceding (upstream) work station. 9. Continuous improvement with JIT systems: a. requires periodically increasing lot sizes or workforce levels to uncover problems. b. entails systematically reducing work-in-process inventories and focusing on operational problem areas. c. focuses exclusively on internal operations because relationships with cus- tomers and suppliers are addressed by the logistics department. d. abandoning the system from time to time for added flexibility. 10. Which one of the following is an aggressive alternative for aggregate planning? a. use seasonal inventories to buffer the manufacturing process from variations in customer demand. b. offer complementary products or services with contra-cyclical demand requirements. c. use overtime and undertime to change workforce levels. d. use subcontracting to overcome short-term capacity shortages. 11. Daily demand for a particular product’s sub-assembly is 30 units and its lead time is one (1) hour. The number of authorized compartments for its kanban tray is four (4). Safety stock for this subassembly has been set at five (5) units. The authorized number of trays for this item will be: a. 0 b. 2 c. 4 d. 6 12. Which of the following statements regarding the economic order quantity ( EOQ ) is true? a. if materials handling costs were to drop, the inventory carry cost per unit of an item would decrease and the EOQ would also decrease. b. the EOQ model assumes a variable demand pattern. c. the EOQ model combines several different item orders to the same supplier. d. if an order quantity is larger than the EOQ, the annual holding (carry) cost for inventory exceeds the annual ordering cost. 13. In the basic EOQ model, if lead time increases from 3 to 6 days, the EOQ will: a. double. b. increase, but not double. c. remain the same. d. decrease by a factor of ‘2’. 14. Consider a piecemeal replenishment situation where the production rate is 100 units per day, the demand (consumption) rate is 4 units per day, and the economic production lot size is 500 units. Which of the following statements is true? a. the average inventory per cycle is 250 units. b. the average inventory per cycle is greater than 250 units. c. the rate of buildup in inventory during the production cycle is less than 100 units per day. d. the rate of buildup in inventory during the production cycle is greater than, or equal to 400 units per day. 15. An item experiences an annual demand of 7,200 units. It costs $8. 00 to hold the item in inventory for one year and $16. 00 to place an order. If the EOQ model is used, what is the time between orders? a. less than 1 week. b. greater than 1 week but