Question 1

Inclusion of quantity discounts may influence both the order
quantity and the reorder point.

Accepted Answer

A) True 
 B)False

Question 2

Opportunity cost (or shrinkage or obsolescence) is an example of:

Accepted Answer

A) holding cost. 
B) order/setup cost. 
C) customer satisfaction cost. 
D) procurement/manufacturing cost. 
A) holding cost. 
B) order/setup cost. 
C) customer satisfaction cost. 
D) procurement/manufacturing cost.

Question 3

In the basic economic order quantity (EOQ) model, a doubling of estimated annual demand would lead to what change in Q*?

Accepted Answer

A) A doubling. 
B) No change. 
C) More than a 50% decrease. 
D) Less than a 50% increase. 
A) A doubling. 
B) No change. 
C) More than a 50% decrease. 
D) Less than a 50% increase.

Question 4

Flavin Cosmetics produces 80,000 tubes of lipstick monthly.Itcurrently purchases the cases used in its lipsticks from McGraw Metals.The cases cost Flavin $.045 each and the cost to place an order with McGraw is estimated to be $150.Approximately a half percent of all cases delivered by McGraw are defective so that Flavin must order 80,402 (80,000/.995) cases to support its production. Flavin is considering producing the cases in-house.It can do this by leasing a casing machine at a cost of $9,000 per year which is
capable of producing 200,000 tubes per month.The production set up cost to use this machine is $200 and the incremental production cost of cases is $.038.In this case, there will be no defective cases.
Flavin estimates its holding cost rate for cases is 20% whether they are purchased or produced in-house.
A.Determine whether Flavin should continue to purchase cases from McGraw or begin in-house production if their objective is to minimize the cost of lipstick production.
B.What is Flavin's optimal purchase or production quantity?

Accepted Answer

A.(Purchase: D = 964,824, C_o = 150, C_h =

Question 5

Holding costs and procurement/manufacturing costs are both functions of the unit cost of the item.

Accepted Answer

A) True 
 B)False

Question 6

Monthly sales of Better House magazine at Smith's Foods follow a normal distribution with a mean of 140 copies and a standard deviation of 15 copies.The magazine sells at Smith's for $1.25 a copy and costs Smith's $.50 per copy.Unsold copies are repurchased by the publisher for $.10 per copy.Smith's management estimates that if it runs out of Better House magazine it suffers a goodwill loss of approximately $.80 for each unsatisfied customer.
A.Determine Smith's optimal order quantity each month for Better House magazine.
B.Determine Smith's expected monthly profit from Better House magazine if it orders optimally.
C.The publisher of Better House magazine is offering Smith's the following option.It will increase its selling price from $.50 to $.55, but will also increase the amount it credits returned
magazines from $.10 to $.25.Should Smith's take this deal? Give your reasons.

Accepted Answer

A.(Order 152 magazines.)

B

Question 7

The inventory holding cost is proportional to the order quantity, but the annual ordering cost is inversely proportional to the order quantity.Annual procurement costs do not depend on the order quantity.

Accepted Answer

A) True 
 B)False

Question 8

In the single period inventory model:

Accepted Answer

A) salvage value is always positive. 
B) goodwill (shortage) costs are always less than the item cost. 
C) goodwill (shortage) costs are always less than the salvage value. 
D) salvage value is always less than the selling price. 
A) salvage value is always positive. 
B) goodwill (shortage) costs are always less than the item cost. 
C) goodwill (shortage) costs are always less than the salvage value. 
D) salvage value is always less than the selling price.

Question 9

The economic order quantity model assumes the item has little or no shrinkage.

Accepted Answer

A) True 
 B)False

Question 10

Below is the published all units discount schedule for cases of Brightall lightbulbs, with breakpoints at 100, 250, and 500.$$\begin{array} { c c } 
 500 \text { cases } & \$ 3.80 / \mathrm { case }
\end{array}$$ Obviously, no one would buy 99 cases at a cost of $495 since you can get 110 cases at the same price.What are the real breakpoints?

Accepted Answer

(For less than 90 cases, pay

Question 11

If sales data differs from demand, what constitutes the difference?

Accepted Answer

When sales data differs from demand, the

Question 12

In the ABC classification system, "C" items typically account for:

Accepted Answer

A) roughly half the annual production value. 
B) around half the number of inventory SKU's. 
C) approximately one-third of annual inventory usage. 
D) the smallest share of the total inventory. 
A) roughly half the annual production value. 
B) around half the number of inventory SKU's. 
C) approximately one-third of annual inventory usage. 
D) the smallest share of the total inventory.

Question 13

Which of the following is not a main category of cost in inventory models?

Accepted Answer

A) Customer satisfaction. 
B) Production/procurement. 
C) Quality/inspection. 
D) Holding/carrying. 
A) Customer satisfaction. 
B) Production/procurement. 
C) Quality/inspection. 
D) Holding/carrying.

Question 14

In the planned shortage model, what is the difference between annual time-dependent shortage cost and annual time-independent shortage cost?

Accepted Answer

(Time dependent cost is the go

Inclusion of quantity discounts may influence both the order quantity and the reorder point.

Opportunity cost (or shrinkage or obsolescence) is an example of:

In the basic economic order quantity (EOQ) model, a doubling of estimated annual demand would lead to what change in Q*?

Holding costs and procurement/manufacturing costs are both functions of the unit cost of the item.

The inventory holding cost is proportional to the order quantity, but the annual ordering cost is inversely proportional to the order quantity.Annual procurement costs do not depend on the order quantity.

In the single period inventory model:

The economic order quantity model assumes the item has little or no shrinkage.

If sales data differs from demand, what constitutes the difference?

In the ABC classification system, "C" items typically account for:

Which of the following is not a main category of cost in inventory models?

In the planned shortage model, what is the difference between annual time-dependent shortage cost and annual time-independent shortage cost?

Introduction to Management Science Models

Introduction to Management Science Models

Applications of Linear and Integer Programming Models

Network Models

Project Scheduling Models

Decision Models

Forecasting

Queuing Models

Simulation Models

Quality Management Models

Markov Process Models

Nonlinear Models:dynamic, Goal, and Nonlinear Programming

Filters

Exam 8: Inventory Models

Inclusion of quantity discounts may influence both the order quantity and the reorder point.

Opportunity cost (or shrinkage or obsolescence) is an example of:

In the basic economic order quantity (EOQ) model, a doubling of estimated annual demand would lead to what change in Q*?

Holding costs and procurement/manufacturing costs are both functions of the unit cost of the item.

The inventory holding cost is proportional to the order quantity, but the annual ordering cost is inversely proportional to the order quantity.Annual procurement costs do not depend on the order quantity.

In the single period inventory model:

The economic order quantity model assumes the item has little or no shrinkage.

If sales data differs from demand, what constitutes the difference?

In the ABC classification system, "C" items typically account for:

Which of the following is not a main category of cost in inventory models?

In the planned shortage model, what is the difference between annual time-dependent shortage cost and annual time-independent shortage cost?

Introduction to Management Science Models

Introduction to Management Science Models

Applications of Linear and Integer Programming Models

Network Models

Project Scheduling Models

Decision Models

Forecasting

Queuing Models

Simulation Models

Quality Management Models

Markov Process Models

Nonlinear Models:dynamic, Goal, and Nonlinear Programming

Filters