1.A process capability index of 2 means that the upper and lower
specification limits of the process are six standard deviations
above and below the mean respectively. True or False?

2.Eliminating variations is always possible. True or False?

3.Which of the following is NOT one of the steps in statistical
process control?

A. Capability analysis

B. Conformance analysis

C. Assignable cause investigation

D. Common cause investigation

4. C&A runs a pizza restaurant. Which of the following is an
output variable for C&A?

           
A. The amount of cheese purchased from the supplier

B. The weather condition

C. The delivery time of the pizza

           
D. The number of employees working for C&A

5. Which of the following is NOT a component of a fishbone
diagram?

A. A horizontal arrow pointing at the
outcome variable

B. Diagonal arrows connecting root
causes of process defects to the horizontal arrow

C. Small lines connecting the
underlying causes of a root cause to the diagonal arrow

D. Statistical distributions of the
outcome variable

6. The use of a production smoothing
strategy creates inventory for products that
     experience a seasonal fluctuation in
demand. True or False ?

7. The actual inventory holding cost
incurred by an item depends on how long it actually spends in
inventory. True or False ?

8. Which of the following is NOT a category of inventory?

A. Raw materials

B. Finished goods

C. Human resources

D. Work in process

9. C&A has on average $6000 in inventory and its daily sales
are $200. What is its days-of-supply?

A. 1,200,000

B. 600

C. 200

D. 30

10. To evaluate inventory turns for a publicly traded company,
data on flow rate can be found in which one of the following
financial reports?

A. Income statement

B. Balance sheet

C. Balance scorecard

D. Sustainability report

11. Limited inventory always increases demand because of the
scarcity effect. True or False?

12. When solving for an optimal order quantity in the presence
of a quantity discount, a rule of thumb is to select an order
quantity which takes advantage of the discount. True or False?

13. The assumptions behind the economic order quantity (EOQ)
model include all of the following EXCEPT:

A. a constant rate of demand.

B. a fixed ordering cost per year.

C. a fixed lead time.

D. a fixed purchase price per unit.

14. Which of the following is TRUE regarding the source of
economies of scale in inventory management according to the
economic order quantity model?

A. The source of economies of scale is a fixed demand rate.

B. The source of economies of scale is a fixed order
quantity.

C. The source of economies of scale is a fixed ordering
cost.

D. The source of economies of scale is a fixed holding cost.

15. Product ___________ refers to the situation when customers
are willing to purchase a less preferred version when their most
preferred version is not available.

A. substitution

B. promotion

C. economy

D. sustainability

16. The optimal order quantity that maximizes expected profit is
always equal to the mean of the demand distribution. True or
False?

17. Expected profit is a direct measure of how well a company
serves its customers. True or False?

18. A wide and short density function has a large ____________
relative to the _________.

A. mean, standard deviation

B. mean, outcome

C. standard deviation, mean

D. standard deviation, outcome

19. Which of the following statements is FALSE regarding
in-stock probability?

A. In-stock probability is equal to the critical ratio when
expected profit is maximized.

B. In-stock probability is greater than the critical ratio when
expected profit is maximized.

C. In-stock probability is a measure of customer service.

D. In-stock probability has a value between 0 and 1.

20. Mismatch costs are the sum of the costs of _________ and
___________.

A. stockouts, work-in-process inventory

B. stockouts, leftover inventory

C. overstock, leftover inventory

D. overstock, work-in-process inventory