Economic order quantity balances ordering cost with what?
A Shortage probability
B Holding cost
C Machine setup time
D Transport distance
Answer: B. Holding cost. EOQ minimizes combined ordering and carrying costs under its assumptions.
A reorder point triggers a new order when inventory reaches what?
A Maximum stock
B Demand during lead time
C Annual demand
D Safety factor only
Answer: B. Demand during lead time. The reorder point covers expected lead-time demand plus any safety stock.
Safety stock protects against demand or lead-time what?
A Price changes only
B Machine capacity
C Variability
D Product redesign
Answer: C. Variability. Safety stock buffers uncertainty in demand and replenishment time.
ABC inventory classification prioritizes items by annual usage what?
A Color
B Size only
C Value
D Supplier location
Answer: C. Value. ABC analysis often ranks inventory by annual consumption value.
The newsvendor model chooses a one-time order under what demand?
A Known constant demand
B Infinite supply
C Zero shortage cost
D Uncertainty
Answer: D. Uncertainty. The newsvendor balances overage and underage costs for uncertain demand.
A service level is the probability demand is met without what?
A Stockout
B Inspection
C Rework
D Setup
Answer: A. Stockout. Cycle service level is the chance of no stockout during a replenishment cycle.
Poisson distribution often models counts of what?
A Arrivals in time
B Service durations only
C Inventory value
D Machine size
Answer: A. Arrivals in time. Poisson processes model event counts in a fixed time interval.
Exponential distribution is commonly used for what queueing time?
A Customer count
B Inventory value
C Service duration
D Demand price
Answer: C. Service duration. Exponential service times are used in basic Markovian queue models.
An M/M/1 queue has how many servers?
A One server
B Two servers
C Infinite servers
D No server
Answer: A. One server. M/M/1 denotes Markovian arrivals, Markovian service and one server.
For an M/M/1 queue, utilization equals arrival rate divided by what?
A Service rate
B Queue length
C Waiting time
D System capacity
Answer: A. Service rate. Server utilization ρ = λ/μ.
An M/M/1 queue is stable when arrival rate is what?
A Below service rate
B Above service rate
C Equal to zero only
D Equal to service rate
Answer: A. Below service rate. A steady-state M/M/1 queue requires λ < μ.
Little’s Law states L equals lambda times what?
A Service rate
B Queue capacity
C Cost per unit
D W
Answer: D. W. Little’s Law is L = λW for a stable system.
A finite-population queue has a limited source of what?
A Service capacity
B Queue disciplines
C Machine hours
D Potential customers
Answer: D. Potential customers. In finite-source models, the arrival rate depends on how many sources are not already in the system.
Balking occurs when a customer does what?
A Leaves after waiting
B Changes service rate
C Completes service
D Does not join queue
Answer: D. Does not join queue. A balking customer decides not to enter a visible queue.
Reneging occurs when a customer does what?
A Refuses to enter
B Leaves after joining
C Changes service order
D Adds a server
Answer: B. Leaves after joining. A reneging customer abandons the queue after waiting.
A Monte Carlo simulation uses what repeated technique?
A Linear programming only
B Manual inspection
C Random sampling
D Deterministic sorting
Answer: C. Random sampling. Monte Carlo estimates system outcomes by repeated random trials.
An expected value is probability-weighted what?
A Maximum outcome
B Outcome average
C Minimum cost only
D Variance squared
Answer: B. Outcome average. Expected value is the sum of each outcome multiplied by its probability.
Variance measures spread around what?
A Median only
B Maximum value
C Decision threshold
D Mean
Answer: D. Mean. Variance is the expected squared deviation from the mean.
A decision tree represents choices and what?
A Machine layouts
B Control limits
C Possible outcomes
D Inventory locations
Answer: C. Possible outcomes. Decision trees map decisions, chance events and resulting payoffs.
A risk-neutral decision maker maximizes what?
A Worst outcome only
B Expected value
C Minimum regret only
D Maximum variance
Answer: B. Expected value. Risk-neutral choices are based on expected monetary value.
A queue discipline determines what?
A Arrival rate
B Service capacity
C Service order
D Queue length only
Answer: C. Service order. Queue discipline specifies how waiting customers are selected for service.
FIFO service means what?
A First in, first out
B Last in, first out
C Shortest job first
D Random order
Answer: A. First in, first out. FIFO serves customers in their arrival order.
An inventory holding rate is often applied to average what?
A Annual demand
B Inventory value
C Order count
D Lead time
Answer: B. Inventory value. Carrying cost is often modeled as a percentage of average inventory value.
A stockout cost can include lost sales and what?
A Holding cost
B Order setup
C Machine depreciation
D Customer goodwill loss
Answer: D. Customer goodwill loss. Shortage costs may include lost revenue, expediting and customer dissatisfaction.
A reorder point with safety stock equals lead-time demand plus what?
A Safety stock
B Annual holding cost
C Order quantity
D Service rate
Answer: A. Safety stock. ROP = expected demand during lead time + safety stock.