Multiple Choice (Choose the best answer)

14. It is costly to hold inventory (e.g., storage costs, obsolescence costs, etc.) but inventory can also be useful in a process because...(choose the best answer

A)Adding inventory to a process will shorten the average time a unit spends in a process.

B)Adding inventory to a process can increase the capacity of the process.

C)Adding inventory to a process is likely to increase quality.

D) None of the above

15. The goal of lean is to ________ from the system.

A) extract profit

B) increase output

C) eliminate waste

D) generate value

16. Which of the following best explains why slow turning items may not be profitable at a brick-and-mortar retailer?

A) If turns are low, days-of-supply will also be low

B) If turns are low, the gross margin will also be low

C)If turns are low, the setup costs to stock the shelf will be high

D) If turns are low, units spend a long time on the retailer's shelves

17. C&A's potato chip filling process has a lower specification limit of 9.5 oz. and an upper specification limit of 10.5 oz. The standard deviation is 0.3 oz. and the mean is 10 oz. What is the process capability index for the chip filling process?

A) 3.33

B) 1.67

C) 0.56

D) 0.28

18. Henry Ford famously proclaimed "You can have any color you want, as long as it is black".Which of the following best reflects his motivation for this position:

A) He believed that customers didn't actually like other colors, so why go through the hassle of making different color cars.

B) With more than one color, the process would have switch over times and that could reduce the overall utilization of the process.

C) Assembling non-black cars takes longer than black cars.

D) He understood that increasing inventory in a process can lead to a longer flow time through the process.

19. Which of the following is a reason for batching?

A) Price fluctuations

B) Demand fluctuations

C) Fixed costs associated with starting the process

D) Variable costs associated with starting the process

20. C&A has on average $6,000 in inventory and its daily sales are $200. What are C&A's weekly inventory turns (assuming demand occurs seven days a week)?

A) 85.7

B) 28.6

C) 0.23

D) 4.29