Operations Flashcards Ch 13

1. One important use of inventories in manufacturing is to decouple operations through the use of work in process inventories.
True False
TRUE
Decoupling operations is an important use of inventories.
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2. The objective of inventory management is to minimize the cost of holding inventory.
True False
FALSE
The objective of inventory management is to allow satisfactory customer service while keeping costs down.
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3. A retail store that carries twice the inventory as its competitor will provide twice the customer service level.
True False
FALSE
There is a limit to how high service level can go; if the competitor's service level is 90%, the retailer can't double that.
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4. The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable.
True False
TRUE
This is the overall objective of inventory management.
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5. The two main concerns of inventory control relate to the costs and the level of customer service.
True False
TRUE
These are the essential facets of inventory control.
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6. To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: the timing and size of orders.
True False
TRUE
These are the fundamental decisions regarding inventory control.
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7. In the EOQ formula, holding costs under 10% are expressed as percentages, above 10% are expressed as annual unit costs.
True False
FALSE
Holding costs are expressed in monetary terms, whether as a set value or as a percentage of the per-unit cost.
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8. DVD recorders would be an example of independent demand items.
True False
TRUE
Components of the DVD recorders would be dependent demand items.
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9. Reorder point models are primarily used for dependent demand items.
True False
FALSE
Reorder point models are primarily used for independent demand items.
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10. An example of