Online Objective Question Answers
1. The purpose of the transportation approach for locational analysis is to minimize
a) total costs
b) total shipping costs
c) total variable costs
d) total fixed costs
e) the number of shipments
2. The initial solution to a transportation problem can be generated in any manner, so long as
a. it minimizes cost
a. b it ignores cost
b. all supply and demand are satisfied
c. degeneracy does not exist
d. all cells are filled
3. Which of the following statements about the northwest corner rule is false?
a. One must exhaust the supply for each row before moving down to the next row.
b. One must exhaust the demand requirements of each column before moving to the next column.
c. When moving to a new row or column, one must select the cell with the lowest cost.
d. One must check that all supply and demand constraints are met.
e. All of the above are false.
4. In transportation model analysis the stepping-stone method is used to
a. obtain an initial optimum solution
b. obtain an initial feasible solution
c. evaluate empty cells for potential solution improvements
d. evaluate empty cells for possible degeneracy
e. balance supply and demand
5. A transportation problem has a feasible solution when
a. all of the improvement indexes are positive
b. the number of filled cells is one less than the number of rows plus the number of columns
c. all the squares are used
d. the solution yields the lowest possible cost
e. all demand and supply constraints are satisfied
6. When the number of shipments in a feasible solution is less than the number of rows plus the number of columns minus one
a. the solution is optimal
b. there is degeneracy, and an artificial allocation must be created
c. a dummy source must be created
d. a dummy destination must be created
e. the closed path has a triangular shape
7. The total cost of the optimal solution to a transportation problem
a. is calculated by multiplying the total supply (including any dummy values) by the average cost of the cells
b. cannot be calculated from the information given
c. can be calculated from the original non-optimal cost, by adding the savings made at each improvement
d. is found by multiplying the amounts in each cell by the cost for that cell for each row and then subtract the products of the amounts in each cell times the cost of each cell for the columns
e. can be calculated based only on the entries in the filled cells of the solution
8. The stepping-stone method
a. is an alternative to using the northwest corner rule
b. often involves tracing closed paths with a triangular shape
c. is used to evaluate the cost effectiveness of shipping goods via transportation routes not currently in the solution
d. is used to identify the relevant costs in a transportation problem
e. helps determine whether a solution is feasible or not
9. In a minimization problem, a negative improvement index in a cell indicates that the
a. solution is optimal
b. total cost will increase if units are reallocated to that cell
c. total cost will decrease if units are reallocated to that cell
d. current iteration is worse than the previous one
e. problem has no feasible solution
10. In a minimization problem, a positive improvement index in a cell indicates that
a. the solution is optimal
b. the total cost will increase if units are reallocated to that cell
c. the total cost will decrease if units are reallocated to that cell
d. there is degeneracy
e. the problem has no feasible solution
11. An improvement index indicates
a. whether a method other than the stepping stone should be used
b. whether a method other that the northwest corner rule should be used
c. whether the transportation cost in the upper left-hand corner of a cell is optimal
d. how much total cost would increase or decrease if the largest possible quantity were reallocated to that cell
e. how much total cost would increase or decrease if a single unit was reallocated to that cell
12. Which of the following would not generally be a motive for a firm to hold inventories? To
a. take advantage of quantity discounts
b. minimize holding costs
c. reduce stockout risks
d. decouple production from distribution
e. meet anticipated demand
13. Which of the following statements about ABC analysis is false?
a. ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.
b. In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers.
c. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
d. In ABC analysis, "C" Items have minimal records, periodic review, and simple controls
e. None of the above statements are true.
14. ABC analysis divides on-hand inventory into three classes, generally based upon
a. unit price
b. the number of units on hand
c. annual demand
d. annual dollar volume
e. item quality
15. Among the advantages of cycle counting is that it
a. makes the annual physical inventory more acceptable to management
b. allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory
c. does not require the detailed inventory records necessary when annual physical inventory is used
d. does not require highly trained people
e. does not need to be performed for less expensive items
16. The two most basic inventory questions answered by the typical inventory model are
a. timing and cost of orders
b. quantity and cost of orders
c. timing and quantity of orders
d. order quantity and service level
e. ordering cost and carrying cost
17. Which of the following statements about the basic EOQ model is true?
a. If the ordering cost were to double, the EOQ would rise.
b. If annual demand were to double, the EOQ would increase.
c. If the carrying cost were to increase, the EOQ would fall.
d. If annual demand were to double, the number of orders per year would decrease.
e. All of the above statements are true.
18. An inventory decision rule states that "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is true?
a. 100 is the reorder point, and 14 is the order quantity.
b. The number 100 is a function of demand during lead time.
c. 14 is the safety stock, and 100 is the reorder point.
d. 14 is the reorder point, and 100 is the order quantity.
e. None of the above.
19. The Production Order Quantity model
a. relaxes the assumption of known and constant demand
b. uses Ordering Cost, not Setup Cost, in its formula
c. assumes instantaneous delivery
d. results in larger average inventory than an equivalent EOQ model
e. is appropriate when units are sold/used as they are produced
20. Which of the following statements regarding the Production Order Quantity model is true?
a. It applies only to items produced in the firm's own production departments.
b. It relaxes the assumption that the demand rate is constant.
c. It minimizes the total production costs.
d. It relaxes the assumption that all the order quantity is received at one time.
e. It minimizes inventory.
21. Which of the following statements about quantity discounts is false?
a. The cost-minimizing solution may, or may not, be where annual holding costs equal annual ordering costs.
b. In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available.
c. The larger annual demand, the less attractive a discount schedule will be.
d. The smaller the ordering cost, the less attractive a discount schedule will be.
e. If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule.
22. The layout strategy that deals with low-volume, high-variety production is
a. fixed-position layout
b. retail/service layout
c. warehouse layout
d. all of the above
e. none of the above
23. A good layout requires determining
a. capacity and space requirements
b. material handling requirements
c. environment and aesthetics
d. flows of information
e. all of the above
24. For which of the following operations would a fixed-position layout be most appropriate?
a. assembly of an automobile
b. production of cameras and TV sets
c. construction of a ship
d. refining of crude oil
e. grocery store
25. The type of layout which features departments or other functional groupings in which similar activities are performed is
a. process
b. product
c. fixed-position
d. mass
e. unit
26. According to Heizer and Render, an office layout
a. groups workers, their equipment, and spaces/offices to provide for movement of information
b. addresses the layout requirements of large, bulky projects such as ships and buildings
c. seeks the best personnel and machine utilization in repetitive or continuous production
d. allocates shelf space and responds to customer behavior
e. deals with low-volume, high-variety production
27. According to Heizer and Render, a retail/service layout
a. groups workers, their equipment, and spaces/offices to provide for movement of information
b. addresses the layout requirements of large, bulky projects such as ships and buildings
c. seeks the best personnel and machine utilization in repetitive or continuous production
d. allocates space and responds to customer behavior
e. deals with low-volume, high-variety production
28. Balancing low-cost storage with low-cost material handling is important in
a. a fixed-position layout
b. a process-oriented layout
c. an office layout
d. a product-oriented layout
e. a warehouse layout
29. which type of layout is used to achieve a smooth and rapid flow of large volumes of output?
a. process
b. batch
c. product
d. unit
e. fixed-position
30. Which of the following are strongly associated with "crossdocking"?
a. non-value-adding activities such as receiving and storing
b. multi-modal transportation facilities at seaports
c. processing items as soon as they are received into a distribution center
d. use of manual product identification systems
e. all of the above
