364-503&504 INFO Sample Test 4 (answers)
Answers to Questions 1-28: 1.B 2.A 3.B 8.A 9.D 10.C 15.A 16.D 17.A 22.D 23.B 24.C
4.A 11.A 18.A 25.A
5.A 12.B 19.A 26.A
6.A 13.D 20.B 27.B
7.D 14.C 21.B 28.A
23. The University Book Store sells 9,000 university logo notebooks per year. The procurement lead time is 10 working days. Weekly demand is normally distributed with standard deviation 5. The store opens 5 days a week. Set z=1.96. If the store uses a fixed order quantity inventory system, what is the appropriate level of safety inventory? (A) 6.20 (B) 13.86 (C) 19.6 (D) 30.99 Solution: Define a time unit as 1 week because demand information is given in terms of weekly demand. So, lead time = 2 weeks and safety inventory = (1.96)( 2 )(5) = 13.86
24. Precision Instrument Inc. specializes in hard making drives for notebooks. The company has four models, each experiencing a normally distributed daily demand with a standard deviation of 50 units. Currently, the target service level is 98%. The company wants to reduce its inventory holding cost. One option is to redesign its models so that one model meets all demand. Assume that such a redesign is feasible. Also assume that the company uses a periodic review inventory system with lead time 9 days and review time 7 days. To achieve the same service level, Precision Instrument Inc. will hold _____ units of safety inventory for the redesigned model. (z=2.05) (A) 410 (B) 579 (C) 820 (D) 1640 Solution: The standard deviation of demand of the common model is ( 4 )(50) = 100 units. Safety inventory = (2.05)(9+7 )(100) = 820 units.
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