HCO2 Operations and Supply Chain Management Exam Version 1
Practice exam for Western Governors University WGU Exams under Western Governors University Exams (College Exams). 5 sample questions.
Sample Questions
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Question 1
Which term refers to the time between placing an order and receiving it?
Correct Answer: C
Rationale: Lead time is the textbook definition of the interval between order placement and order receipt. Stock-out describes a shortage, order point is the inventory level that triggers an order, and safety stock is buffer inventory; none of these capture the elapsed-time concept.
Rationale: Lead time is the textbook definition of the interval between order placement and order receipt. Stock-out describes a shortage, order point is the inventory level that triggers an order, and safety stock is buffer inventory; none of these capture the elapsed-time concept.
Question 2
Which type of inventory cost includes costs paid for storage space?
Correct Answer: A
Rationale: Carrying (or holding) costs explicitly embrace every expense required to keep inventory in the building: rent, utilities, insurance, security, and opportunity cost of capital. Ordering costs are the administrative costs of placing orders, stock-out costs are penalty costs from shortages, and purchase cost is the invoice price of the goods themselves.
Rationale: Carrying (or holding) costs explicitly embrace every expense required to keep inventory in the building: rent, utilities, insurance, security, and opportunity cost of capital. Ordering costs are the administrative costs of placing orders, stock-out costs are penalty costs from shortages, and purchase cost is the invoice price of the goods themselves.
Question 3
A sporting-goods store relies on a perpetual inventory system. What is one drawback of this system?
Correct Answer: A
Rationale: Perpetual systems require scanners, RFID or POS integration, database licences and networking infrastructure up-front; that capital outlay can be large for a small retailer. Maintenance is ongoing but not necessarily 'costly', physical counts are still needed for audit but are not the primary drawback, and supplier flexibility is unrelated.
Rationale: Perpetual systems require scanners, RFID or POS integration, database licences and networking infrastructure up-front; that capital outlay can be large for a small retailer. Maintenance is ongoing but not necessarily 'costly', physical counts are still needed for audit but are not the primary drawback, and supplier flexibility is unrelated.
Question 4
What is one of the four broad categories of inventory costs?
Correct Answer: B
Rationale: The four standard cost groups are ordering, carrying, stock-out and purchase (sometimes stock-out is split into back-order and lost-sales). Ordering costs are the clerical, freight and receiving expenses incurred every time an order is placed. Sunk, depreciation and selling costs are not inventory-specific categories.
Rationale: The four standard cost groups are ordering, carrying, stock-out and purchase (sometimes stock-out is split into back-order and lost-sales). Ordering costs are the clerical, freight and receiving expenses incurred every time an order is placed. Sunk, depreciation and selling costs are not inventory-specific categories.
Question 5
Which inventory model balances ordering cost and carrying cost to find the lowest total cost?
Correct Answer: C
Rationale: The EOQ formula Q*=√(2DS/H) explicitly minimises the sum of annual ordering cost (DS/Q) and annual carrying cost (HQ/2). EPQ relaxes the instantaneous-receipt assumption, quantity-discount models add price breaks, and fixed-interval models use time rather than quantity triggers.
Rationale: The EOQ formula Q*=√(2DS/H) explicitly minimises the sum of annual ordering cost (DS/Q) and annual carrying cost (HQ/2). EPQ relaxes the instantaneous-receipt assumption, quantity-discount models add price breaks, and fixed-interval models use time rather than quantity triggers.