MOCK EXAM

TEST I: TRUE OR FALSE. If the statement is TRUE Shade Letter A; If the statement is FALSE
Shade Letter E.

1. A fixed position layout is widely used in farming and firefighting.

2. The maximin approach involves choosing the alternative with the highest payoff.
3. RFID eliminates the need for manual counting and bar code scanning of goods at receiving docks,
in warehouses, and on retail shelves.
4. Gatekeeping refers to finding ways to minimize the number of items that are returned.
5. The A-B-C approach involves classifying inventory items by unit cost, expensive items are 'A', low
cost items are 'C'.
6. Collaborative planning, Forecasting and Replenishment (CPFR) Systems incorporate key
information such as promotion timing and supply constraints that can effectively eliminate a
significant amount of inventory from the supply chain.
7. The part of a supply chain involved with the forward and reverse flow of goods, services, cash
and information is called reverse logistics.
8. Inadequate control of inventories can result in both under and overstocking of items.
9. Testing how a problem solution reacts to changes in one or more of the model parameters is
called decision analysis.
10. Product layouts achieve a high degree of labor and equipment utilization which tends to offset
their high equipment costs.
11. Little’s Law can be useful in quantifying pipeline inventory.
12. Manufacturing firms used inventories as buffers to maintain continuity of production that would
be disrupted by breakdowns of equipment.
13. Inventory fluctuation can results in higher costs and lower customer satisfaction can be
magnified by forecast inaccuracies.
14. The EVPI indicates an upper limit on the amount a decision-maker should be willing to spend to
obtain perfect information.
15. The overall objective of inventory management is to achieve satisfactory levels of customer
service while keeping inventory costs within reasonable bounds.
16. Job-Shop systems have a lower unit cost than continuous systems do because continuous
systems use costly specialized equipment.
17. Bounded rationality limits imposed on decision making by costs, time, and technology.
18. Knowledge of actual sales can greatly enhance forecasting and inventory management.
19. The goal of procurement is to develop and implement purchasing plans for products and services
that support operations strategies.
20. A process layout is more susceptible to shutdowns caused by equipment breakdowns than a
product layout.
21. A tabular presentation that shows the outcome for each decision alternative under the various
possible states of nature is called Laplace table.
22. EOQ inventory models are basically concerned with the timing of orders.
 23. Expected Monetary Value criterion determines the expected payoff of each alternative and
choose the alternative that has the lowest expected payoff.
24. Decision Trees unlike payoff tables; allow analysis in situations using sequential decisions​.
25. Product layout yields high in-process inventory costs.

TEST II: MULTIPLE CHOICE (2pts Each): Choose the correct answer.

1. Computer-aided manufacturing (CAM) refers to the use of computers in:

C) data analysis
A) product design D) quality control
B) decision making E) process control

2. ________has helped business concentrate on their core business

B) Scheduling E) Lean Production

A) Supply Chains C) Outsourcing
D) ERP

3. The substitution of machinery that has sensing and control devices for human labor is best described
by the term:
D) computer-integrated manufacturing.
A) automation. E) flexible manufacturing system.
B) feedback control.
C) computer-aided manufacturing.

4. Logistics includes all of these except:

C) outgoing shipments of goods or materials.

A) the movement of materials within a D) customer selection.
production facility. E) returned goods processing.
B) incoming shipments of goods or materials.

5. A risk avoider would want ______ safety stock.

B) More E) 50%
A) Less C) The same
D) Zero

6. Which one of the following is not considered an important factor in service layout design?
D) all are important
A) cost minimization and product flow E) none are important
B) frequency of orders
C) customer attitude and image
7. A group of machines including supervisory computer control, automatic material handling, and
possibly robots is called:

D) computer-integrated manufacturing
A) computer aided design E) a flexible manufacturing system
B) a manufacturing cell
C) computer-aided manufacturing

8. In the basic EOQ model, if D = 60 per month, S = $12, and H = $10 per unit per month, EOQ is:

C) 24
A) 10 D) 72
B) 12 E) 144

9. Shortage costs can include​ the following except:

D) Similar costs
A) Opportunity cost of not making a sale E) None of the above
B) Loss of customer goodwill
C) Late charges

10. Which one of the following is not common to product layouts.

D) ability to adjust to changes in demand
A) a high rate of output E) all are common
B) specialization of labor
C) low unit costs

11. Which of the following is ​not​ a benefit of effective supply chain management?

C) shorter lead times. E) larger number of

A) lower inventory costs. D) greater customer loyalty. suppliers.
B) higher productivity.

The following information is for 12-16

Benedict’s Bakery buys flour in 25 kilogram bags. The bakery uses an average of 4,860 bags a year.
Preparing an order and receiving a shipment of flour involves a cost of $10 per order. Annual carrying
costs are $75 per bag.

12. Determine the economic order quantity.

B) 32 bags E) 38 bags
A) 30 bags C) 34 bags
D) 36 bags

13. What is the average number of bags on hand?

A) 15 bags D) 18 bags
B) 16 bags E) 20 bags
C) 17 bags

14. How many orders per year will there be?

A) 125 orders C) 135 orders E) 145 orders

B) 130 orders D) 140 orders

15. Compute the total cost of ordering and carrying flour.

A) 1,350.00
B) 1,550.00
C) 2,300.00
D) 2,700.00
E) 2,250.00

16. If ordering costs were to increase by$1 per order, How much is the total cost?
A) 2,700.00
B) 2, 725.57
C) 2,820.34
D) 2,831.79
E) 2,843.67

The following information is for 17-18

A car rental agency uses 96 boxes of staples a year. The boxes cost $4 each. It costs $10 to order staples,
and carrying costs are $0.80 per box on an annual basis.

17. Determine the order quantity that will minimize the sum of ordering and holding boxes of staples

A) 47 C) 48 E) 49
B) 47.50 D) 48.50

18. Determine the annual cost of ordering and carrying the boxes of staples

A) 19.60 D) 39.19
B) 38.90 E) 40.18
C) 19.59

The following information is for 19-20

A service garage uses 120 boxes of cleaning cloths a year. The boxes cost $6 each. Ordering cost is $3
and holding cost is 10 percent of purchase cost per unit on an annual basis.
19. Determine the economic order quantity.
A) 35 D) 42.5
B) 37.5 E) 45
C) 40

20. Determine the total cost of carrying the cloths (excluding purchase price)

A) 17.80 D) 10.29
B) 20.79 E) 37.50
C) 10.50

The following information is for 21-25

The operations manager for a local bus company wants to decide whether he should purchase a small,
medium, or large new bus for his company. He estimates that the annual profits (in $000) will vary
depending upon whether passenger demand is low, moderate, or high, as follows:

21. If he uses the maximin criterion, which size bus will he decide to purchase?
A) small D) either small or medium
B) medium E) either medium or large
C) large

22. If he uses the Laplace criterion, which size bus will he decide to purchase?
A) small D) either small or medium
B) medium E) either medium or large
C) large

23. If he uses the minimax regret criterion, which size bus will he decide to purchase?

A) small D) either small or medium

B) medium E) either medium or large
C) large
24 If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively, what
is the expected annual profit for the bus that he will decide to purchase?
A) $15,000
B) $61,000
C) $69,000
D) $72,000
E) $87,000

25. If he feels the chances of low, moderate, and high demand are 30%, 30%, and 40% respectively,
what is his expected value of perfect information?

A) $15,000
B) $61,000
C) $69,000
D) $72,000
E) $87,000

“That in all Things GOD may

be Glorified!”
ANSWER:

1. A 14. A
2. E 15. A
3. A 16. E
4. E 17. A
5. E 18. A
6. A 19. A
7. E 20.E
8. A 21. E
9. E 22. E
10. A 23. E
11. A 24. A
12. A 25. E
13. A

TEST II 9. E 18. D
1. E 10. D 19. A
2. C 11. E 20.B
3. A 12. D 21. A
4. D 13. D 22. B
5. B 14. C 23. E
6. A 15. D 24. D
7. E 16. D 25. A
8. B 17. E