Question 1

At the optimal order quantity (EOQ),the total annual inventory cost (TC)is given by ______.

Accepted Answer

A) TC = (Annual demand/EOQ)× Ordering cost per order/2 + (EOQ)× Holding cost per unit per year 
B) TC = (Annual demand/EOQ)× Ordering cost per order + (EOQ/2)× Holding cost per unit per year 
C) TC = (Annual demand/EOQ)× Ordering cost per order/2 + (EOQ/2)× Holding cost per unit per year 
D) TC = (Annual Demand/EOQ)× Ordering cost per order + (EOQ)× Holding cost per unit per year 
A) TC = (Annual demand/EOQ)× Ordering cost per order/2 + (EOQ)× Holding cost per unit per year 
B) TC = (Annual demand/EOQ)× Ordering cost per order + (EOQ/2)× Holding cost per unit per year 
C) TC = (Annual demand/EOQ)× Ordering cost per order/2 + (EOQ/2)× Holding cost per unit per year 
D) TC = (Annual Demand/EOQ)× Ordering cost per order + (EOQ)× Holding cost per unit per year

Question 2

If the order quantity is fixed,as in a continuous review system,the decision of when to place the order is determined by ______.

Accepted Answer

A) the daily demand rate and the lead time 
B) the daily demand rate and the safety stock 
C) the safety stock and the lead time 
D) the safety stock and the purchase price 
A) the daily demand rate and the lead time 
B) the daily demand rate and the safety stock 
C) the safety stock and the lead time 
D) the safety stock and the purchase price

Question 3

For a particular product,the annual demand is 12,000,the number of working days in the year is 320,and the EOQ is 300.Given this information,which of the following statements is true?

Accepted Answer

A) The time between orders is 6. 
B) The time between orders is 7. 
C) The time between orders is 8. 
D) The time between orders cannot be calculated. 
A) The time between orders is 6. 
B) The time between orders is 7. 
C) The time between orders is 8. 
D) The time between orders cannot be calculated.

Question 4

Which of the following is NOT a type of inventory control system?

Accepted Answer

A) continuous review systems 
B) periodic review systems 
C) single-period systems 
D) constant replenishment systems 
A) continuous review systems 
B) periodic review systems 
C) single-period systems 
D) constant replenishment systems

Question 5

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

Accepted Answer

A) Lead time for the receipt of orders is constant and known. 
B) Quantity (or volume)discounts are available. 
C) Multiple products are involved. 
D) Demand is not known. 
A) Lead time for the receipt of orders is constant and known. 
B) Quantity (or volume)discounts are available. 
C) Multiple products are involved. 
D) Demand is not known.

Question 6

The equation for economic order quantity shows that if the holding costs are high,then ______.

Accepted Answer

A) order quantities will be smaller to keep annual holding costs low 
B) order quantities will be larger to keep our annual holding costs low 
C) order frequency will be smaller to keep our annual holding costs low 
D) order frequency will remain the same,as it is not dependent on holding costs 
A) order quantities will be smaller to keep annual holding costs low 
B) order quantities will be larger to keep our annual holding costs low 
C) order frequency will be smaller to keep our annual holding costs low 
D) order frequency will remain the same,as it is not dependent on holding costs

Question 7

For a certain product,ordering costs are $30 per order,and the holding cost is $15 per case of this product per year.If the projected annual demand is 900 cases,what is the economic order quantity?

Accepted Answer

A) 40 cases 
B) 50 cases 
C) 60 cases 
D) 70 cases 
A) 40 cases 
B) 50 cases 
C) 60 cases 
D) 70 cases

Question 8

Which of the following statements is FALSE if the production run size is Q,the production rate is p,and the demand or usage rate is d?

Accepted Answer

A) The number days of production run is given by Q/p. 
B) Inventory used up at the end of the production cycle is given by (Q/p)× d. 
C) Inventory used up at the end of the production cycle is given by (p/Q)× d. 
D) The maximum inventory is given by Q x (1-d/p). 
A) The number days of production run is given by Q/p. 
B) Inventory used up at the end of the production cycle is given by (Q/p)× d. 
C) Inventory used up at the end of the production cycle is given by (p/Q)× d. 
D) The maximum inventory is given by Q x (1-d/p).

Question 9

If the average daily demand rate is 50 units per day and the lead time is 3 days,then the reorder point is ______.

Accepted Answer

A) 50 / 3 (i.e.,about 17 units) 
B) 50 * 3 (i.e.,150 units) 
C) 50 ^ 3 (i.e.,125,000 units) 
D) 50 units 
A) 50 / 3 (i.e.,about 17 units) 
B) 50 * 3 (i.e.,150 units) 
C) 50 ^ 3 (i.e.,125,000 units) 
D) 50 units

Question 10

Which of the following assumptions is FALSE in the EPQ model?

Accepted Answer

A) Production runs to replenish inventory occur on a continuous basis. 
B) Many products are involved. 
C) The demand is known and occurs uniformly and continuously throughout the year. 
D) Shortages are allowed. 
A) Production runs to replenish inventory occur on a continuous basis. 
B) Many products are involved. 
C) The demand is known and occurs uniformly and continuously throughout the year. 
D) Shortages are allowed.

Question 11

According to the EPQ model,the larger the quantity produced from each production setup ______.

Accepted Answer

A) the fewer production runs are needed to meet demand requirements and the smaller will be the total annual setup cost 
B) the more production runs are needed to meet the demand requirements and the smaller will be the total annual setup cost 
C) the fewer production runs are needed to meet the demand requirements and the higher will be the total annual setup cost 
D) the more production runs are needed to meet demand requirements and the higher will be the total annual setup cost 
A) the fewer production runs are needed to meet demand requirements and the smaller will be the total annual setup cost 
B) the more production runs are needed to meet the demand requirements and the smaller will be the total annual setup cost 
C) the fewer production runs are needed to meet the demand requirements and the higher will be the total annual setup cost 
D) the more production runs are needed to meet demand requirements and the higher will be the total annual setup cost

Question 12

In the EPQ model,given that Q is the optimal production quantity,d is the demand rate,p is the production rate,and H is the holding cost per unit per year,the total annual holding cost equation is given by ______.

Accepted Answer

A) [Q/2 × ((d-p)/p)] 
B) [Q × ((p-d)/p)] × H 
C) [Q/2 × ((p-d)/p)] × H 
D) Q/2 x H 
A) [Q/2 × ((d-p)/p)] 
B) [Q × ((p-d)/p)] × H 
C) [Q/2 × ((p-d)/p)] × H 
D) Q/2 x H

Question 13

For a particular product,the total number of orders per year is 40,the number of working days in the year is 320,and the EOQ is 300.Given this information,which of the following statements is true?

Accepted Answer

A) The time between orders cannot be calculated. 
B) The time between orders is 7. 
C) The annual demand is 12,000. 
D) The annual demand cannot be calculated. 
A) The time between orders cannot be calculated. 
B) The time between orders is 7. 
C) The annual demand is 12,000. 
D) The annual demand cannot be calculated.

Question 14

Which of the following statements is true with regard to the order quantity?

Accepted Answer

A) If the order quantity in each order is large,then fewer orders will be placed,which will result in lower annual holding costs and annual ordering costs. 
B) If the order quantity in each order is small,then more orders will be placed,which will result in lower annual holding costs but higher annual ordering costs. 
C) If the order quantity in each order is large,then fewer orders will be placed,which will result in higher annual ordering costs and annual holding costs. 
D) If the order quantity in each order is small,the fewer orders will be placed,which will result in lower annual ordering costs but higher holding costs. 
A) If the order quantity in each order is large,then fewer orders will be placed,which will result in lower annual holding costs and annual ordering costs. 
B) If the order quantity in each order is small,then more orders will be placed,which will result in lower annual holding costs but higher annual ordering costs. 
C) If the order quantity in each order is large,then fewer orders will be placed,which will result in higher annual ordering costs and annual holding costs. 
D) If the order quantity in each order is small,the fewer orders will be placed,which will result in lower annual ordering costs but higher holding costs.

Question 15

In the EOQ model,the optimal order quantity is the amount at which ______.

Accepted Answer

A) the total annual ordering costs are at a minimum 
B) the total holding costs are at a minimum 
C) the sum of the total annual ordering costs and the total annual holding costs is at a minimum 
D) the difference between the total annual ordering costs and the total annual holding costs is at a maximum 
A) the total annual ordering costs are at a minimum 
B) the total holding costs are at a minimum 
C) the sum of the total annual ordering costs and the total annual holding costs is at a minimum 
D) the difference between the total annual ordering costs and the total annual holding costs is at a maximum

Question 16

In the EPQ model,the total annual setup costs are given by ______.

Accepted Answer

A) (Annual demand / EPQ)* Setup cost 
B) (Annual demand * EPQ)* Setup cost 
C) (Annual demand * EPQ)/ Setup cost 
D) (Annual demand / EPQ)/ Setup cost 
A) (Annual demand / EPQ)* Setup cost 
B) (Annual demand * EPQ)* Setup cost 
C) (Annual demand * EPQ)/ Setup cost 
D) (Annual demand / EPQ)/ Setup cost

Question 17

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 set up cost?

Accepted Answer

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

Question 18

In the EOQ model,if neither shortages nor quantity discounts are allowed,then the total annual cost expression can be simplified to ______.

Accepted Answer

A) the product of total annual ordering cost and total annual holding cost 
B) the sum of total annual ordering cost and total annual holding cost 
C) the difference between total annual ordering cost and total annual holding cost 
D) the ratio of total annual ordering cost to total annual holding cost 
A) the product of total annual ordering cost and total annual holding cost 
B) the sum of total annual ordering cost and total annual holding cost 
C) the difference between total annual ordering cost and total annual holding cost 
D) the ratio of total annual ordering cost to total annual holding cost

Question 19

The setup cost to make carpets is $20 per setup.The holding cost is $1.75 per yard per year,and the annual demand is 12,000 yards of carpet per year.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.In this example,______.

Accepted Answer

A) the daily demand rate is 12,000/365 
B) the daily demand rate is 12,000/300 
C) the daily production rate is 12,000/300 
D) the daily production rate is 12,000/300. 
A) the daily demand rate is 12,000/365 
B) the daily demand rate is 12,000/300 
C) the daily production rate is 12,000/300 
D) the daily production rate is 12,000/300.

Question 20

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

Accepted Answer

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

Exam 19: Inventory Control Models

At the optimal order quantity (EOQ),the total annual inventory cost (TC)is given by ______.

If the order quantity is fixed,as in a continuous review system,the decision of when to place the order is determined by ______.

For a particular product,the annual demand is 12,000,the number of working days in the year is 320,and the EOQ is 300.Given this information,which of the following statements is true?

Which of the following is NOT a type of inventory control system?

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

The equation for economic order quantity shows that if the holding costs are high,then ______.

For a certain product,ordering costs are $30 per order,and the holding cost is $15 per case of this product per year.If the projected annual demand is 900 cases,what is the economic order quantity?

Which of the following statements is FALSE if the production run size is Q,the production rate is p,and the demand or usage rate is d?

If the average daily demand rate is 50 units per day and the lead time is 3 days,then the reorder point is ______.

Which of the following assumptions is FALSE in the EPQ model?

According to the EPQ model,the larger the quantity produced from each production setup ______.

In the EPQ model,given that Q is the optimal production quantity,d is the demand rate,p is the production rate,and H is the holding cost per unit per year,the total annual holding cost equation is given by ______.

For a particular product,the total number of orders per year is 40,the number of working days in the year is 320,and the EOQ is 300.Given this information,which of the following statements is true?

Which of the following statements is true with regard to the order quantity?

In the EOQ model,the optimal order quantity is the amount at which ______.

In the EPQ model,the total annual setup costs are given by ______.

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 set up cost?

In the EOQ model,if neither shortages nor quantity discounts are allowed,then the total annual cost expression can be simplified to ______.

The setup cost to make carpets is $20 per setup.The holding cost is $1.75 per yard per year,and the annual demand is 12,000 yards of carpet per year.The manufacturing facility operates 300 days,and 120 yards of the carpet are produced per day.In this example,______.

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

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

Filters