121. One of the following statements about PRS (Periodic Reordering System) is not true identify.
     

1. 1. PRS requires continuous monitoring of inventory levels
      

   
   
   

   2. PRS is useful in control of perishable items
      

   
   
   

   3. PRS provides basis for adjustments to account for variations in demand
      

   
   
   

   4. In PRS, inventory holding costs are higher than in Fixed Reorder Quantity System

   
   
   

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1. View Hint View Answer Discuss in Forum

   NA

   Correct Option: C

   NA

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122. Setup costs do not include
     

1. 1. Labour cost of setting up machines
      

   
   
   

   2. Ordering cost or raw material
      

   
   
   

   3. Maintenance cost of the machines
      

   
   
   

   4. Cost of processing the work piece

   
   
   

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1. View Hint View Answer Discuss in Forum

   NA

   Correct Option: D

   NA

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123. The most commonly used criteria for measuring forecast error is
     

1. 1. Mean absolute deviation
      

   
   
   

   2. Mean absolute percentage error
      

   
   
   

   3. Mean standard error
      

   
   
   

   4. Mean square error

   
   
   

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1. View Hint View Answer Discuss in Forum

   NA

   Correct Option: A

   NA

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124. In a forecasting model, at the end of period 13, the forecasted value for period 14 is 75. Actual value in the periods 14 to 16 are constant at 100. If the assumed simple exponential smoothing parameter is 0.5, then the MSE at the end of period 16 is
     

1. 1. 820.31
      

   
   
   

   2. 273.44
      

   
   
   

   3. 43.75
      

   
   
   

   4. 14.58

   
   
   

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1. View Hint View Answer Discuss in Forum

   F₁₄ = 75, D₁₄ = 100
   F₁₅ = F₁₄ + α(D₁₄ – F₁₄)
   = 75 + 0.5 (100.75)
   F₁₅ = 87.5
   D₁₅ = 100
   F₁₆ = 87.5 + 0.5 (100 – 87.5)
   F₁₆ = 93.75
   

   MSE =	∑ei²
   	n

   
   Where e_i = D_i - F_i
   

   MSE =	(100 - 75)² + (100 - 87.5)² + (100 - 93.75)²	= 273.44
   	3

   
   

   Correct Option: B

   F₁₄ = 75, D₁₄ = 100
   F₁₅ = F₁₄ + α(D₁₄ – F₁₄)
   = 75 + 0.5 (100.75)
   F₁₅ = 87.5
   D₁₅ = 100
   F₁₆ = 87.5 + 0.5 (100 – 87.5)
   F₁₆ = 93.75
   

   MSE =	∑ei²
   	n

   
   Where e_i = D_i - F_i
   

   MSE =	(100 - 75)² + (100 - 87.5)² + (100 - 93.75)²	= 273.44
   	3

   
   

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125. Which of the following is a technique for forecasting?
     

1. 1. Exponential smoothing
      

   
   
   

   2. PERT/CPM
      

   
   
   

   3. Gantt chart technique
      

   
   
   

   4. Control charts

   
   
   

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1. View Hint View Answer Discuss in Forum

   NA
   

   Correct Option: A

   NA
   

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