Question 1

The total annual holding cost is obtained by ______.

Accepted Answer

A) multiplying the average inventory level during the year by the average holding cost 
B) multiplying the inventory level at the end of the year by the holding cost per unit per year 
C) multiplying the inventory level at the beginning of the year by the holding cost per unit per year 
D) multiplying the average inventory level during the year by the holding cost per unit per year 
A) multiplying the average inventory level during the year by the average holding cost 
B) multiplying the inventory level at the end of the year by the holding cost per unit per year 
C) multiplying the inventory level at the beginning of the year by the holding cost per unit per year 
D) multiplying the average inventory level during the year by the holding cost per unit per year

Question 2

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.What is the total annual holding cost under the economic production quantity policy?

Accepted Answer

A) $374.17 
B) $458.26 
C) $561.25 
D) $1,122.50 
A) $374.17 
B) $458.26 
C) $561.25 
D) $1,122.50

Question 3

If we are ordering materials from an outside vendor,then the total inventory-related cost on an annual basis is ______.

Accepted Answer

A) the sum of (total annual ordering cost)and (total annual holding cost)less the sum of (total annual stock-out cost)and (total annual materials purchase cost) 
B) the ratio of the sum of total annual ordering cost and total annual holding cost to the sum of total annual stock-out cost and total annual materials purchase cost 
C) the product of the sum of total annual ordering cost and total annual holding cost to the sum of total annual stock-out cost and total annual materials purchase cost 
D) the sum of total annual ordering cost + total annual holding cost + total annual stock-out cost + total annual materials purchase cost 
A) the sum of (total annual ordering cost)and (total annual holding cost)less the sum of (total annual stock-out cost)and (total annual materials purchase cost) 
B) the ratio of the sum of total annual ordering cost and total annual holding cost to the sum of total annual stock-out cost and total annual materials purchase cost 
C) the product of the sum of total annual ordering cost and total annual holding cost to the sum of total annual stock-out cost and total annual materials purchase cost 
D) the sum of total annual ordering cost + total annual holding cost + total annual stock-out cost + total annual materials purchase cost

Question 4

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 50 orders in the year. 
B) The total annual ordering cost is $250. 
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 50 orders in the year. 
B) The total annual ordering cost is $250. 
C) The holding cost per unit is $2.50. 
D) The total annual holding costs are $25,000 (= $2.50 * 10,000).

Question 5

If you have total annual cost (TAC),total annual setup cost (TASC),total annual holding cost (TAHC),and total annual materials purchase cost (TAMPC),then you can calculate total annual stock-out cost (TASOC)by this formula.

Accepted Answer

A) TASOC = TAC - TASC - TAHC - TAMPC 
B) TASOC = TAC + TASC - TAHC - TAMPC 
C) TASOC = TAC + TASC + TAHC - TAMPC 
D) TASOC = TAC + TASC - TAHC + TAMPC 
A) TASOC = TAC - TASC - TAHC - TAMPC 
B) TASOC = TAC + TASC - TAHC - TAMPC 
C) TASOC = TAC + TASC + TAHC - TAMPC 
D) TASOC = TAC + TASC - TAHC + TAMPC

Question 6

Independent demand items are typically ______.

Accepted Answer

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

Question 7

Which of the following statements with regard to the economic production quantity (EPQ)model is FALSE?

Accepted Answer

A) It was developed in 1918. 
B) The EOQ model is based on the EPQ model. 
C) It assumes that the company will produce the items. 
D) It assumes that lead time is known and is constant. 
A) It was developed in 1918. 
B) The EOQ model is based on the EPQ model. 
C) It assumes that the company will produce the items. 
D) It assumes that lead time is known and is constant.

Question 8

In the EPQ model,setup costs refer to ______.

Accepted Answer

A) the labor costs related to preparing the necessary equipment,changing tools and fixtures on the equipment,cleaning,and so forth 
B) the labor costs related to ordering materials,receiving materials,and payment on invoices for materials received 
C) the labor costs related to transporting and warehousing materials received 
D) the labor costs related to inspecting the quality of materials received 
A) the labor costs related to preparing the necessary equipment,changing tools and fixtures on the equipment,cleaning,and so forth 
B) the labor costs related to ordering materials,receiving materials,and payment on invoices for materials received 
C) the labor costs related to transporting and warehousing materials received 
D) the labor costs related to inspecting the quality of materials received

Question 9

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

Accepted Answer

A) ordering costs and holding costs are inversely related 
B) ordering costs and holding costs are directly related 
C) ordering costs and stock-out costs are directly related 
D) ordering costs and stock-out costs are inversely related 
A) ordering costs and holding costs are inversely related 
B) ordering costs and holding costs are directly related 
C) ordering costs and stock-out costs are directly related 
D) ordering costs and stock-out costs are inversely related

Question 10

The overall goal for the buyer is to choose the order quantity that will minimize total annual cost,which is ______.

Accepted Answer

A) the sum of the yearly holding,ordering,and purchase costs 
B) the sum of the yearly holding and ordering,less purchase costs 
C) the sum of the yearly holding,ordering,and purchase costs less quantity discounts 
D) the sum of the yearly holding,ordering,less quantity discounts 
A) the sum of the yearly holding,ordering,and purchase costs 
B) the sum of the yearly holding and ordering,less purchase costs 
C) the sum of the yearly holding,ordering,and purchase costs less quantity discounts 
D) the sum of the yearly holding,ordering,less quantity discounts

Question 11

Given that the production run size is Q,the production rate is p,and the usage rate is d,then the inventory used up or depleted at the end of the production cycle can be calculated as ______.

Accepted Answer

A) (Q/p)× d 
B) (Q/p) 
C) (Q/d)× p 
D) (Q/d) 
A) (Q/p)× d 
B) (Q/p) 
C) (Q/d)× p 
D) (Q/d)

Question 12

At the optimal order quantity (EOQ),the average inventory level during the year is given by ______.

Accepted Answer

A) EOQ - 2 
B) EOQ / 2 
C) EOQ + 2 
D) 2 x EOQ 
A) EOQ - 2 
B) EOQ / 2 
C) EOQ + 2 
D) 2 x EOQ

Question 13

Which of the following is NOT likely to have independent demand?

Accepted Answer

A) TVs 
B) tires 
C) cars 
D) iPhones 
A) TVs 
B) tires 
C) cars 
D) iPhones

Question 14

The total cost in the EOQ is ______.

Accepted Answer

A) insensitive to minor deviations in the order quantity from the EOQ amount 
B) sensitive to minor deviations in the order quantity from the EOQ amount 
C) insensitive to major deviations in the order quantity from the EOQ amount 
D) sensitive to deviations in the order quantity from the EOQ amount by more than 20% 
A) insensitive to minor deviations in the order quantity from the EOQ amount 
B) sensitive to minor deviations in the order quantity from the EOQ amount 
C) insensitive to major deviations in the order quantity from the EOQ amount 
D) sensitive to deviations in the order quantity from the EOQ amount by more than 20%

Question 15

The normal distribution curve is ______.

Accepted Answer

A) skewed to the left of the mean 
B) skewed to the right of the mean 
C) symmetrical about the mean 
D) linear 
A) skewed to the left of the mean 
B) skewed to the right of the mean 
C) symmetrical about the mean 
D) linear

Question 16

The total annual cost is given by the sum of ordering costs and holding costs.At the lowest total annual cost,______.

Accepted Answer

A) the total annual ordering cost is less than the total annual holding cost 
B) the total annual ordering cost is equal to the total annual holding cost 
C) the total annual ordering cost is more than the total annual holding cost 
D) the total annual ordering cost is twice the total annual holding cost 
A) the total annual ordering cost is less than the total annual holding cost 
B) the total annual ordering cost is equal to the total annual holding cost 
C) the total annual ordering cost is more than the total annual holding cost 
D) the total annual ordering cost is twice the total annual holding cost

Question 17

Which of the following statements is FALSE with regard to holding costs?

Accepted Answer

A) The holding cost per unit per period is expressed as a percentage of the purchase price (P). 
B) The holding cost per unit per period is called the carrying rate. 
C) The holding cost per unit per period is called the holding rate. 
D) The holding cost per unit per period is expressed as a percentage of ordering costs. 
A) The holding cost per unit per period is expressed as a percentage of the purchase price (P). 
B) The holding cost per unit per period is called the carrying rate. 
C) The holding cost per unit per period is called the holding rate. 
D) The holding cost per unit per period is expressed as a percentage of ordering costs.

Question 18

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 total number of orders per year is 40. 
B) The total number of orders per year is 30. 
C) The total number of orders per year is 80. 
D) The total number of orders per year cannot be calculated. 
A) The total number of orders per year is 40. 
B) The total number of orders per year is 30. 
C) The total number of orders per year is 80. 
D) The total number of orders per year cannot be calculated.

Question 19

In the EOQ model,if shortages are not allowed,then ______.

Accepted Answer

A) stock-out costs do not exist 
B) stock-out costs are high 
C) stock-out costs are low 
D) stock-out costs are acceptable 
A) stock-out costs do not exist 
B) stock-out costs are high 
C) stock-out costs are low 
D) stock-out costs are acceptable

Question 20

In the EOQ model,determining the optimal order quantity requires us to ______.

Accepted Answer

A) increase number of orders along with quantity ordered at any time 
B) strike a balance between quantity and quality of materials ordered 
C) strike a balance between ordering and holding costs 
D) increase number of orders depending on the volume discounts provided 
A) increase number of orders along with quantity ordered at any time 
B) strike a balance between quantity and quality of materials ordered 
C) strike a balance between ordering and holding costs 
D) increase number of orders depending on the volume discounts provided

Exam 19: Inventory Control Models

The total annual holding cost is obtained by ______.

If we are ordering materials from an outside vendor,then the total inventory-related cost on an annual basis is ______.

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?

If you have total annual cost (TAC),total annual setup cost (TASC),total annual holding cost (TAHC),and total annual materials purchase cost (TAMPC),then you can calculate total annual stock-out cost (TASOC)by this formula.

Independent demand items are typically ______.

Which of the following statements with regard to the economic production quantity (EPQ)model is FALSE?

In the EPQ model,setup costs refer to ______.

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

The overall goal for the buyer is to choose the order quantity that will minimize total annual cost,which is ______.

Given that the production run size is Q,the production rate is p,and the usage rate is d,then the inventory used up or depleted at the end of the production cycle can be calculated as ______.

At the optimal order quantity (EOQ),the average inventory level during the year is given by ______.

Which of the following is NOT likely to have independent demand?

The total cost in the EOQ is ______.

The normal distribution curve is ______.

The total annual cost is given by the sum of ordering costs and holding costs.At the lowest total annual cost,______.

Which of the following statements is FALSE with regard to holding costs?

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?

In the EOQ model,if shortages are not allowed,then ______.

In the EOQ model,determining the optimal order quantity requires us to ______.

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