Chapter 7: The Conversion cycle Flashcards
Which of the following is not an advantageous
reason to reduce inventories?
a. Inventories provide a competitive
advantage.
b. Inventories can invite overproduction.
c. Inventories are expensive to maintain.
d. Inventories may conceal problems.
e. All of these are good reasons to reduce
inventories
a. Inventories provide a competitive
advantage.
The fundamental EOQ model
a. provides for fluctuating lead times during
reorder cycles.
b. is relatively insensitive to errors in demand,
procurement costs, and carrying costs.
c. focuses on the trade-off between production costs and carrying costs.
d. is stochastic in nature.
e. is best used in conjunction with a periodic
inventory system.
c. focuses on the trade-off between production costs and carrying costs.
Refer to the equation for the EOQ in the text.
Car Country, a local Ford dealer, sells 1,280
small SUVs each year. Keeping a car on the
lot costs Car Country $200 per month, so the
company prefers to order as few SUVs as is
economically feasible. However, each time an
order is placed, the company incurs total costs
of $300—$240 of which is fixed and $60 is
variable. Determine the company’s EOQ.
a. 8
b. 16
c. 18
d. 56
e. 62
b. 16
Questions 4 though 6 are based on the diagram
above, which represents the EOQ model.
- Which line segment represents the reorder lead
time?
a. AB
b. AE
c. AF
d. BC
e. AC
e. AC
Which line segment identifies the quantity of
safety stock maintained?
a. AB
b. AE
c. AC
d. BC
e. EF
a. AB
Which line segment represents the length of
time to consume the total quantity of materials
ordered?
a. DE
b. BC
c. AC
d. AE
e. AD
b. BC
Which of the following is NOT a principle of
lean manufacturing?
a. Products are pushed from the production
end to the customer.
b. All activities that do not add value and
maximize the use of scarce resources must
be eliminated.
c. Achieve high inventory turnover rate.
d. A lean manufacturing firm must have established and cooperative relationships with
vendors.
e. All of the above are lean manufacturing
principles.
a. Products are pushed from the production
end to the customer.
All of the following are problems with traditional accounting information EXCEPT:
a. Managers in a JIT setting require immediate information.
b. The measurement principle tends to ignore
standards other than money.
c. Variance analysis may yield insignificant
values.
d. The overhead component in a manufacturing company is usually very large.
e. All of these are problems associated with
traditional accounting information.
e. All of these are problems associated with
traditional accounting information.
Which of the following is NOT a problem
associated with standard cost accounting?
a. Standard costing motivates management to
produce large batches of products and build
inventory.
b. Applying standard costing leads to product
cost distortions in a lean environment
c. Standard costing data are associated
with excessive time lags that reduce its
usefulness.
d. The financial orientation of standard costing
may promote bad decisions.
e. All of the above are problems with standard
costing.
e. All of the above are problems with standard
costing.
- Which one of the following statements is true?
a. ERP evolved directly from MRP.
b. ERP evolved into MRP and MRP evolved
into MRP II.
c. MRP II evolved from MRP and MRP II evolved into ERP.
d. None of the above is true.
c. MRP II evolved from MRP and MRP II evolved into ERP.
