Question 1

Which of the following is not considered a holding cost?

Accepted Answer

A) Interest. 
B) Insurance. 
C) Depreciation. 
D) Opportunity cost. 
E) Stockout cost. 
A) Interest. 
B) Insurance. 
C) Depreciation. 
D) Opportunity cost. 
E) Stockout cost.

Question 2

Which of the following is a consequence of being out of stock of an item?

Accepted Answer

A) Customer dissatisfaction. 
B) Delayed revenues. 
C) Costs for additional record keeping. 
D) Lost business. 
E) All of the above. 
A) Customer dissatisfaction. 
B) Delayed revenues. 
C) Costs for additional record keeping. 
D) Lost business. 
E) All of the above.

Question 3

In the EOQ model with quantity discounts,with holding cost stated as a percentage of unit purchase price,in order for the EOQ of the lowest curve to be optimum,it must:

Accepted Answer

A) have the lowest total cost. 
B) be in a feasible range. 
C) be to the left of the pricebreak quantity for that price. 
D) have the largest quantity compared to other EOQs. 
E) None of the above. 
A) have the lowest total cost. 
B) be in a feasible range. 
C) be to the left of the pricebreak quantity for that price. 
D) have the largest quantity compared to other EOQs. 
E) None of the above.

Question 4

In the basic EOQ model,if usage and production/delivery rates are equal,there will be no inventory buildup,and thus the order quantity cannot be calculated.

Accepted Answer

A) True 
 B)False

Question 5

Using the EOQ model,if an item's holding cost increases,it will be ordered more frequently.

Accepted Answer

A) True 
 B)False

Question 6

The goal of the basic EOQ model is to:

Accepted Answer

A) minimize order size. 
B) minimize order cost. 
C) minimize holding cost. 
D) minimize the sum of purchasing and setup costs. 
E) minimize the sum of setup and holding costs. 
A) minimize order size. 
B) minimize order cost. 
C) minimize holding cost. 
D) minimize the sum of purchasing and setup costs. 
E) minimize the sum of setup and holding costs.

Question 7

The average inventory level is inversely related to order size.

Accepted Answer

A) True 
 B)False

Question 8

At what point should the manager reorder?

Accepted Answer

A) 0 cases remaining. 
B) 4 cases remaining. 
C) 12 cases remaining. 
D) 16 cases remaining. 
E) 20 cases remaining. 
A) 0 cases remaining. 
B) 4 cases remaining. 
C) 12 cases remaining. 
D) 16 cases remaining. 
E) 20 cases remaining.

Question 9

Planned shortages are permitted in the EOQ model with gradual replenishment.

Accepted Answer

A) True 
 B)False

Question 10

The objective of inventory management is to minimize the cost of holding inventory.

Accepted Answer

A) True 
 B)False

Question 11

In the basic EOQ model,if annual demand is 50,holding cost is $2,and setup cost is $15,EOQ is approximately:

Accepted Answer

A) 11. 
B) 20. 
C) 24. 
D) 28. 
E) 375. 
A) 11. 
B) 20. 
C) 24. 
D) 28. 
E) 375.

Question 12

Which of the following is not an assumption of the basic EOQ model?

Accepted Answer

A) The usage rate is constant. 
B) Only one product is involved. 
C) Holding costs are independent of price. 
D) Each order is received in a single delivery. 
E) There are no quantity discounts. 
A) The usage rate is constant. 
B) Only one product is involved. 
C) Holding costs are independent of price. 
D) Each order is received in a single delivery. 
E) There are no quantity discounts.

Question 13

What is the EOQ for pepperoni?

Accepted Answer

A) 20 pounds. 
B) 40 pounds. 
C) 60 pounds. 
D) 80 pounds. 
E) 100 pounds. 
A) 20 pounds. 
B) 40 pounds. 
C) 60 pounds. 
D) 80 pounds. 
E) 100 pounds.

Question 14

Which of the following is not a benefit of JIT systems?

Accepted Answer

A) Inventories are reduced. 
B) Space requirements are reduced. 
C) Quality is increased. 
D) Lead times are increased. 
E) Disruptions in production are reduced. 
A) Inventories are reduced. 
B) Space requirements are reduced. 
C) Quality is increased. 
D) Lead times are increased. 
E) Disruptions in production are reduced.

Question 15

Annual setup cost is a function of order size.

Accepted Answer

A) True 
 B)False

Question 16

In the EOQ model with planned shortages,Q* always will be smaller than S*.

Accepted Answer

A) True 
 B)False

Question 17

Safety stock is held to meet anticipated need.

Accepted Answer

A) True 
 B)False

Question 18

Administrative costs provide a strong incentive to place larger orders.

Accepted Answer

A) True 
 B)False

Question 19

The objective of an inventory policy is to minimize the total inventory cost per unit time.

Accepted Answer

A) True 
 B)False

Question 20

The JIT philosophy recognizes that inventories are a necessary investment.

Accepted Answer

A) True 
 B)False

Exam 21: CD - Inventory Management With Known Demand

Which of the following is not considered a holding cost?

Which of the following is a consequence of being out of stock of an item?

In the EOQ model with quantity discounts,with holding cost stated as a percentage of unit purchase price,in order for the EOQ of the lowest curve to be optimum,it must:

In the basic EOQ model,if usage and production/delivery rates are equal,there will be no inventory buildup,and thus the order quantity cannot be calculated.

Using the EOQ model,if an item's holding cost increases,it will be ordered more frequently.

The goal of the basic EOQ model is to:

The average inventory level is inversely related to order size.

At what point should the manager reorder?

Planned shortages are permitted in the EOQ model with gradual replenishment.

The objective of inventory management is to minimize the cost of holding inventory.

In the basic EOQ model,if annual demand is 50,holding cost is $2,and setup cost is $15,EOQ is approximately:

Which of the following is not an assumption of the basic EOQ model?

What is the EOQ for pepperoni?

Which of the following is not a benefit of JIT systems?

Annual setup cost is a function of order size.

In the EOQ model with planned shortages,Q* always will be smaller than S*.

Safety stock is held to meet anticipated need.

Administrative costs provide a strong incentive to place larger orders.

The objective of an inventory policy is to minimize the total inventory cost per unit time.

The JIT philosophy recognizes that inventories are a necessary investment.

Introduction

Linear Programming: Basic Concepts

Linear Programming: Formulation and Applications

The Art of Modeling With Spreadsheets

What-If Analysis for Linear Programming

Network Optimization Problems

Using Binary Integer Programming to Deal With Yes-Or-No Decisions

Nonlinear Programming

Decision Analysis

Cd Supplement - Decision Analysis

Forecasting

Queueing Models

CD Supplement - Additional Queueing Models

Computer Simulation: Basic Concepts

CD Supplement - the Inverse Transformation Method for Generating Random Observations

Computer Simulation With Crystal Ball

CD - Solution Concepts for Linear Programming

CD - Transportation and Assignment Problems

CD - Pertcpm Models for Project Management

CD - Goal Programming

CD - Inventory Management With Uncertain Demand

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