Question 1

Which of the following is an assumption of the economic order quantity model?

Accepted Answer

A) Multiple products are involved. 
B) Demand is not known. 
C) Shortages are allowed. 
D) Quantity ordered is received all at once in a single delivery. 
A) Multiple products are involved. 
B) Demand is not known. 
C) Shortages are allowed. 
D) Quantity ordered is received all at once in a single delivery. D

Question 2

The setup cost to make a carpet is $20 per setup.The holding cost is $2.00 per yard per year,and the annual demand is 12,000 yards.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.Given this information,which of the following statements is true?

Accepted Answer

A) The optimal production quantity is 600. 
B) The optimal production quantity is 500. 
C) The optimal production quantity is 400. 
D) The optimal production quantity is 300. 
A) The optimal production quantity is 600. 
B) The optimal production quantity is 500. 
C) The optimal production quantity is 400. 
D) The optimal production quantity is 300. A

Question 3

Assume that the order quantity is 1000 units,and the holding costs are $5 a unit per year.In this case,______.

Accepted Answer

A) the average inventory level is 500 units,and the total annual holding costs are $2,500 
B) the average inventory level is 1,000 units,and the total annual holding costs are $5,000 
C) the average inventory level is 0 units,and the total annual holding costs are $5 
D) the average inventory level is 500 units,and the total annual holding costs are $5,000 
A) the average inventory level is 500 units,and the total annual holding costs are $2,500 
B) the average inventory level is 1,000 units,and the total annual holding costs are $5,000 
C) the average inventory level is 0 units,and the total annual holding costs are $5 
D) the average inventory level is 500 units,and the total annual holding costs are $5,000 A

Question 4

A local distributor for a Belgian chocolate manufacturer expects to sell 12,000 cases of chocolate truffles next year.The annual holding costs for the truffles are $16 per case per year.The ordering cost is $60 per order.The distributor operates 320 days a year.Then ______.

Accepted Answer

A) the EOQ is 200 
B) the EOQ is 300 
C) the EOQ is 400 
D) the EOQ is 500 
A) the EOQ is 200 
B) the EOQ is 300 
C) the EOQ is 400 
D) the EOQ is 500

Question 5

The level to which the inventory of an item should fall before the firm places a new order to replenish inventory is called ______.

Accepted Answer

A) the reorder point 
B) the holding point 
C) the safety stock point 
D) the stock-out point 
A) the reorder point 
B) the holding point 
C) the safety stock point 
D) the stock-out point

Question 6

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

Accepted Answer

A) There are 15 orders in the year. 
B) The average inventory is 1,000 units. 
C) The holding cost per unit is $2.50. 
D) The total annual holding costs are $25,000 (= $2.50 * 10000). 
A) There are 15 orders in the year. 
B) The average inventory is 1,000 units. 
C) The holding cost per unit is $2.50. 
D) The total annual holding costs are $25,000 (= $2.50 * 10000).

Question 7

In the economic order quantity model,the time between orders is ______.

Accepted Answer

A) given by dividing the number of orders by the number of working days in the year 
B) given by dividing the demand by the economic order quantity 
C) called the length of the order cycle 
D) given by the product the number of orders and the number of working days in the year 
A) given by dividing the number of orders by the number of working days in the year 
B) given by dividing the demand by the economic order quantity 
C) called the length of the order cycle 
D) given by the product the number of orders and the number of working days in the year

Question 8

Which of the following is NOT a model used to determine the best order size?

Accepted Answer

A) the economic order quantity (EOQ)model 
B) the economic production quantity (EPQ)model 
C) the annual stocking model 
D) the quantity discount model 
A) the economic order quantity (EOQ)model 
B) the economic production quantity (EPQ)model 
C) the annual stocking model 
D) the quantity discount model

Question 9

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

Accepted Answer

A) There are five orders in the year. 
B) The total annual ordering cost is $2,500. 
C) The holding cost per unit is $2.50. 
D) The total annual holding costs are $25,000 (= $2.50 * 10,000). 
A) There are five orders in the year. 
B) The total annual ordering cost is $2,500. 
C) The holding cost per unit is $2.50. 
D) The total annual holding costs are $25,000 (= $2.50 * 10,000).

Question 10

Which of the following assumptions is true of the EPQ model?

Accepted Answer

A) The quantity ordered is delivered all at once. 
B) There is considerable variation in the lead time. 
C) There are no quantity discounts. 
D) The lead time is not known. 
A) The quantity ordered is delivered all at once. 
B) There is considerable variation in the lead time. 
C) There are no quantity discounts. 
D) The lead time is not known.

Question 11

One of the assumptions of the EPQ model is that:

Accepted Answer

A) The demand varies throughout the year. 
B) Shortages are allowed. 
C) Quantity discounts vary over time. 
D) The quantity ordered is produced incrementally. 
A) The demand varies throughout the year. 
B) Shortages are allowed. 
C) Quantity discounts vary over time. 
D) The quantity ordered is produced incrementally.

Question 12

In the EOQ model,if our order quantity is less than the economic order quantity,then ______.

Accepted Answer

A) the annual ordering costs will be the same or lower than the annual holding costs 
B) the annual ordering costs will be the same as the annual holding costs 
C) the annual ordering costs will be higher than the annual holding costs 
D) the annual ordering costs will be lower than the annual holding costs 
A) the annual ordering costs will be the same or lower than the annual holding costs 
B) the annual ordering costs will be the same as the annual holding costs 
C) the annual ordering costs will be higher than the annual holding costs 
D) the annual ordering costs will be lower than the annual holding costs

Question 13

If the order quantity is greater than the EPQ,then ______.

Accepted Answer

A) the annual holding costs will be higher than the annual setup costs 
B) the annual holding costs will be equal to the annual ordering costs 
C) the annual holding costs will be lower than the annual ordering costs 
D) the annual holding costs will be twice the annual setup costs 
A) the annual holding costs will be higher than the annual setup costs 
B) the annual holding costs will be equal to the annual ordering costs 
C) the annual holding costs will be lower than the annual ordering costs 
D) the annual holding costs will be twice the annual setup costs

Question 14

The setup cost to make a carpet is $20 per setup.The holding cost is $2.00 per yard per year,and the annual demand is 12,000 yards.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.Given this information,what is total annual carrying cost?

Accepted Answer

A) $600 
B) $500 
C) $400 
D) $300 
A) $600 
B) $500 
C) $400 
D) $300

Question 15

The setup cost to make carpet is $20 per setup.The holding cost is $2.00 per yard per year,and the annual demand is 12,000 yards.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.Given this information,which of the following statements is true?

Accepted Answer

A) The daily demand rate is 40. 
B) The daily demand rate is 32.8. 
C) The daily demand rate is 120. 
D) The daily demand rate is 12,000. 
A) The daily demand rate is 40. 
B) The daily demand rate is 32.8. 
C) The daily demand rate is 120. 
D) The daily demand rate is 12,000.

Question 16

Assume that the annual demand is 10,000 units and the order quantity per order is 1,000 units,then ______.

Accepted Answer

A) there are 10 orders during the year 
B) there is one order placed as soon as existing inventory is consumed 
C) there is one order placed at the end of each month 
D) this is an indicator that this is not a lean operation 
A) there are 10 orders during the year 
B) there is one order placed as soon as existing inventory is consumed 
C) there is one order placed at the end of each month 
D) this is an indicator that this is not a lean operation

Question 17

In the EPQ model,the total annual cost equation is minimized at ______.

Accepted Answer

A) the point of intersection of the total production and holding cost curves 
B) the point of intersection of the total setup and holding cost curves 
C) the point of intersection of the total ordering and holding cost curves 
D) the point of intersection of the total production and setup cost curves 
A) the point of intersection of the total production and holding cost curves 
B) the point of intersection of the total setup and holding cost curves 
C) the point of intersection of the total ordering and holding cost curves 
D) the point of intersection of the total production and setup cost curves

Question 18

Dependent demand items are ______.

Accepted Answer

A) those items whose demand depends on the demand for finished products 
B) intermediate products whose demand depends on external marketing conditions 
C) raw materials whose demand is determined by external marketing conditions 
D) semifinished products whose demand is determined by external marketing conditions 
A) those items whose demand depends on the demand for finished products 
B) intermediate products whose demand depends on external marketing conditions 
C) raw materials whose demand is determined by external marketing conditions 
D) semifinished products whose demand is determined by external marketing conditions

Question 19

Which of the following statements is true with regard to EPQ and EOQ?

Accepted Answer

A) The economic production quantity (EPQ)model was developed in the 1960s. 
B) In the EOQ model,the assumption is that the company will produce the items. 
C) The EPQ model assumes that the company will order the items from an outside vendor. 
D) The EPQ model is an extension of the EOQ model. 
A) The economic production quantity (EPQ)model was developed in the 1960s. 
B) In the EOQ model,the assumption is that the company will produce the items. 
C) The EPQ model assumes that the company will order the items from an outside vendor. 
D) The EPQ model is an extension of the EOQ model.

Question 20

The economic order quantity is given by ______.

Accepted Answer

A) the square root of ((2 times demand times ordering costs)divided by holding costs) 
B) the square root of (holding costs divided by (2 times demand times ordering costs)) 
C) the square of ((2 times demand times ordering costs)divided by holding costs) 
D) the square of (holding costs divided by (2 times demand times ordering costs)) 
A) the square root of ((2 times demand times ordering costs)divided by holding costs) 
B) the square root of (holding costs divided by (2 times demand times ordering costs)) 
C) the square of ((2 times demand times ordering costs)divided by holding costs) 
D) the square of (holding costs divided by (2 times demand times ordering costs))

Exam 19: Inventory Control Models

Which of the following is an assumption of the economic order quantity model?

The setup cost to make a carpet is $20 per setup.The holding cost is $2.00 per yard per year,and the annual demand is 12,000 yards.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.Given this information,which of the following statements is true?

Assume that the order quantity is 1000 units,and the holding costs are $5 a unit per year.In this case,______.

A local distributor for a Belgian chocolate manufacturer expects to sell 12,000 cases of chocolate truffles next year.The annual holding costs for the truffles are $16 per case per year.The ordering cost is $60 per order.The distributor operates 320 days a year.Then ______.

The level to which the inventory of an item should fall before the firm places a new order to replenish inventory is called ______.

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

In the economic order quantity model,the time between orders is ______.

Which of the following is NOT a model used to determine the best order size?

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

Which of the following assumptions is true of the EPQ model?

One of the assumptions of the EPQ model is that:

In the EOQ model,if our order quantity is less than the economic order quantity,then ______.

If the order quantity is greater than the EPQ,then ______.

The setup cost to make a carpet is $20 per setup.The holding cost is $2.00 per yard per year,and the annual demand is 12,000 yards.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.Given this information,what is total annual carrying cost?

The setup cost to make carpet is $20 per setup.The holding cost is $2.00 per yard per year,and the annual demand is 12,000 yards.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.Given this information,which of the following statements is true?

Assume that the annual demand is 10,000 units and the order quantity per order is 1,000 units,then ______.

In the EPQ model,the total annual cost equation is minimized at ______.

Dependent demand items are ______.

Which of the following statements is true with regard to EPQ and EOQ?

The economic order quantity is given by ______.

Introduction to Managing Global Operations and Supply Chains

Operations and Supply Chain Strategies

Project Management

Supplement: Project Management

Product and Service Innovations

Supplement: Reliability

Managing for Quality

Quality Improvement and Control Tools

Capacity Planning

Supply Chain Design and Location Planning

Process Design and Layout Planning

Supplement: Tools for Analyzing, Designing, and Selecting Processes and Layouts

Supplier Management

Logistics Management

Demand Management and Customer Service

Demand Forecasting Methods

Lean Operations and Supply Chains

Inventory Management

Sales and Operations Planning

Master Scheduling and Material Requirements Planning

Supplement: Capacity Requirements Planning, MRP II, ERP, and DRP

Detailed Scheduling

Linear Programming

The Transportation Models

Waiting Line Models

Simulation

Learning Curves

Decision-Making Tools

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