Question 1

The terms "inventory on hand" and "inventory position" have the same meaning.

Accepted Answer

A) True 
 B)False

Question 2

To be considered as inventory, goods must be finished and waiting for delivery.

Accepted Answer

A) True 
 B)False

Question 3

Show the total cost expression and calculate the EOQ for an item with holding cost rate 18%, unit cost $8.00, annual demand of 40000, and ordering cost of $48.

Accepted Answer

TC = (1/2)

Question 4

The Tiernan Gallery and Art Museum distributes to its visitors a printed guide to its collections. There are about 18000 visitors per year. Holding costs for the brochures are 20% and it costs $30 to place an order with the printer. The printer has offered the following discount schedule:   ​
How many brochures should be printed at a time?

Accepted Answer

EOQ₃ = 1732.1 (raise to 3000)EO

Question 5

In the single-period inventory model with probabilistic demand,

Accepted Answer

A)  surplus items are not allowed to be carried in future inventory. 
B)  co = cu. 
C)  probabilities are used to calculate expected losses. 
D)  All of the alternatives are correct. 
A)  surplus items are not allowed to be carried in future inventory. 
B)  co = cu. 
C)  probabilities are used to calculate expected losses. 
D)  All of the alternatives are correct.

Question 6

Chez Paul Restaurant orders special Styrofoam "doggy bags" for its customers once a month and lead time is one week. Weekly demand for doggy bags is approximately normally distributed with an average of 120 bags and a standard deviation of 25. Chez Paul wants at most a 3% chance of running out of doggy bags during the replenishment period. If he has 150 bags in stock when he places an order, how many additional bags should he order? What is the safety stock in this case?

Accepted Answer

Order 555

Question 7

Which of the following is not implied when average inventory is Q/2, where Q is the order quantity?

Accepted Answer

A)  An entire order quantity arrives at one time. 
B)  The previous order quantity is entirely depleted when the next order arrives. 
C)  An order quantity is depleted at a uniform rate over time. 
D)  Backorders are permitted. 
A)  An entire order quantity arrives at one time. 
B)  The previous order quantity is entirely depleted when the next order arrives. 
C)  An order quantity is depleted at a uniform rate over time. 
D)  Backorders are permitted.

Question 8

Daily demand for packages of five videotapes at a warehouse store is found to be normally distributed with mean 50 and standard deviation 5. When the store orders more tapes, the ordering cost is $42 and the orders take 4 days to arrive. Each pack of tapes costs $7.20 and there is a 24% annual holding cost for inventory. Assume the store is open 360 days a year.
a.What is the EOQ?
b.If the store wants the probability of stocking out to be no more than 5%, and demand each day is independent of the day before, what reorder point should be set?
c.How much of your reorder point in part b) is safety stock?

Accepted Answer

a.Q* = 866.025
B.DDL

Question 9

The Super Discount store (open 24 hours a day, every day) sells 8-packs of paper towels, at the rate of approximately 420 packs per week. Because the towels are so bulky, the annual cost to carry them in inventory is estimated at $.50. The cost to place an order for more is $20 and it takes four days for an order to arrive.
a.Find the optimal order quantity.
b.What is the reorder point?
c.How often should an order be placed?

Accepted Answer

a.Q* = 1322
B.r = (6

Question 10

A weekly sports magazine publishes a special edition for the World Series. The sales forecast is for the number of copies to be normally distributed with mean 800,000 copies and standard deviation 60,000 copies. It costs $.35 to print a copy, and the newsstand price is $1.95. Unsold copies will be scrapped. How many copies should be printed?

Accepted Answer

P(demand < Q*) = 1.6

Question 11

​What are the two most critical behaviors of an inventory system you need to recognize in order to apply the best
model?

Accepted Answer

The two most critical behaviors of an in

Question 12

Inventory

Accepted Answer

A)  is held against uncertain usage so that a supply of items is available if needed. 
B)  constitutes a small part of the cost of doing business. 
C)  is not something that can be managed effectively. 
D)  All of the alternatives are correct. 
A)  is held against uncertain usage so that a supply of items is available if needed. 
B)  constitutes a small part of the cost of doing business. 
C)  is not something that can be managed effectively. 
D)  All of the alternatives are correct.

Question 13

Safety stock

Accepted Answer

A)  can be determined by the EOQ formula. 
B)  depends on the inventory position. 
C)  depends on the variability of demand during lead time. 
D)  is not needed if Q* is the actual order quantity. 
A)  can be determined by the EOQ formula. 
B)  depends on the inventory position. 
C)  depends on the variability of demand during lead time. 
D)  is not needed if Q* is the actual order quantity.

Question 14

Which cost would not be considered part of a holding cost?

Accepted Answer

A)  cost of capital 
B)  shipping cost 
C)  insurance cost 
D)  warehouse overhead 
A)  cost of capital 
B)  shipping cost 
C)  insurance cost 
D)  warehouse overhead

Question 15

A firm that is presently using the Economic Order Quantity model and is planning to switch to the Economic Production Lot-Size model can expect

Accepted Answer

A)  the Q* to increase 
B)  the maximum inventory level to increase. 
C)  the order cycle to decrease. 
D)  annual holding cost to be less than annual setup cost. 
A)  the Q* to increase 
B)  the maximum inventory level to increase. 
C)  the order cycle to decrease. 
D)  annual holding cost to be less than annual setup cost.

Question 16

For the EOQ model, which of the following relationships is incorrect?

Accepted Answer

A)  As the order quantity increases, the number of orders placed annually decreases. 
B)  As the order quantity increases, annual holding cost increases. 
C)  As the order quantity increases, annual ordering cost increases. 
D)  As the order quantity increases, average inventory increases. 
A)  As the order quantity increases, the number of orders placed annually decreases. 
B)  As the order quantity increases, annual holding cost increases. 
C)  As the order quantity increases, annual ordering cost increases. 
D)  As the order quantity increases, average inventory increases.

Question 17

If an item's per-unit backorder cost is greater than its per-unit holding cost, no intentional shortage should be planned.

Accepted Answer

A) True 
 B)False

Question 18

Amazing Bakers sells bread to 40 supermarkets. It costs Amazing $1,250 per day to operate its plant. The profit per loaf of bread sold in the supermarket is $.025. Any unsold bread is returned to the Amazing Thrift Store to be sold at a loss of $.015.
a.If sales follow a normal distribution with μ = 70,000 and σ = 5,000 per day, how many loaves should Amazing bake daily?
b.Amazing is considering a different sales plan for which the profit per loaf of bread sold in the supermarket is $.03 and the loss per loaf bread returned is $.018. If μ = 60,000 and σ = 4,000 per day, how many loaves should Amazing bake daily?

Accepted Answer

a.71,600 l

Question 19

At the optimal order quantity for the quantity discount model, the sum of the annual holding and ordering costs is minimized.

Accepted Answer

A) True 
 B)False

Question 20

Inventory position is defined as

Accepted Answer

A)  the amount of inventory on hand in excess of expected demand. 
B)  the amount of inventory on hand. 
C)  the amount of inventory on hand plus the amount of inventory on order. 
D)  None of the alternatives is correct. 
A)  the amount of inventory on hand in excess of expected demand. 
B)  the amount of inventory on hand. 
C)  the amount of inventory on hand plus the amount of inventory on order. 
D)  None of the alternatives is correct.

The terms "inventory on hand" and "inventory position" have the same meaning.

To be considered as inventory, goods must be finished and waiting for delivery.

Show the total cost expression and calculate the EOQ for an item with holding cost rate 18%, unit cost $8.00, annual demand of 40000, and ordering cost of $48.

In the single-period inventory model with probabilistic demand,

Which of the following is not implied when average inventory is Q/2, where Q is the order quantity?

What are the two most critical behaviors of an inventory system you need to recognize in order to apply the best model?

Inventory

Safety stock

Which cost would not be considered part of a holding cost?

A firm that is presently using the Economic Order Quantity model and is planning to switch to the Economic Production Lot-Size model can expect

For the EOQ model, which of the following relationships is incorrect?

If an item's per-unit backorder cost is greater than its per-unit holding cost, no intentional shortage should be planned.

At the optimal order quantity for the quantity discount model, the sum of the annual holding and ordering costs is minimized.

Inventory position is defined as

Introduction

An Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Advanced Linear Programming Applications

Distribution and Network Models

Integer Linear Programming

Nonlinear Optimization Models

Project Scheduling: Pertcpm

Waiting Line Models

Simulation

Decision Analysis

Multicriteria Decisions

Time Series Analysis and Forecasting

Markov Processes

Linear Programming: Simplex Method

Simplex-Based Sensitivity Analysis and Duality

Solution Procedures for Transportation and Assignment Problems

Minimal Spanning Tree

Dynamic Programming

Filters

Exam 10: Inventory Models

The terms "inventory on hand" and "inventory position" have the same meaning.

To be considered as inventory, goods must be finished and waiting for delivery.

Show the total cost expression and calculate the EOQ for an item with holding cost rate 18%, unit cost $8.00, annual demand of 40000, and ordering cost of $48.

In the single-period inventory model with probabilistic demand,

Which of the following is not implied when average inventory is Q/2, where Q is the order quantity?

​What are the two most critical behaviors of an inventory system you need to recognize in order to apply the best model?

Inventory

Safety stock

Which cost would not be considered part of a holding cost?

A firm that is presently using the Economic Order Quantity model and is planning to switch to the Economic Production Lot-Size model can expect

For the EOQ model, which of the following relationships is incorrect?

If an item's per-unit backorder cost is greater than its per-unit holding cost, no intentional shortage should be planned.

At the optimal order quantity for the quantity discount model, the sum of the annual holding and ordering costs is minimized.

Inventory position is defined as

Introduction

An Introduction to Linear Programming

Linear Programming: Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications in Marketing, Finance, and Operations Management

Advanced Linear Programming Applications

Distribution and Network Models

Integer Linear Programming

Nonlinear Optimization Models

Project Scheduling: Pertcpm

Waiting Line Models

Simulation

Decision Analysis

Multicriteria Decisions

Time Series Analysis and Forecasting

Markov Processes

Linear Programming: Simplex Method

Simplex-Based Sensitivity Analysis and Duality

Solution Procedures for Transportation and Assignment Problems

Minimal Spanning Tree

Dynamic Programming

Filters

What are the two most critical behaviors of an inventory system you need to recognize in order to apply the best model?