Deck 18: Inventory Management: Economic Order Quantity,jit,and the Theory of Constraints

Question 1

If inventory consists of goods purchased from an outside supplier,what are the inventory-related costs?

A)ordering and carrying costs
B)setup costs and production costs
C)ordering and setup costs
D)production and carrying costs

Answer 1

A

Question 2

Which of the following equations determines the total annual ordering costs?

A)Cost of placing an order * Order quantity
B)Cost of placing an order * Number of orders per year
C)Cost of placing an order * One-half of the order quantity
D)Unit carrying costs per year * Order quantity

Answer 2

Cost of placing an order * Number of orders per year

Question 3

What is safety stock?

A)the cost of holding inventory
B)the value added inventory
C)the amount of inventory that could have been sold if you had it on hand
D)extra inventory carried to serve as insurance against fluctuations in demand

Answer 3

D

Question 4

What does the JIT approach to inventory management achieve?

A)It allows greater flexibility as to when products can be manufactured.
B)It results in higher inventory levels and reduces ordering and setup costs.
C)It results in lower inventory carrying costs.
D)It allows fewer employees to be included in the production process.

Question 5

Burley Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}\text { Cost of placing an order}&\$ 50.00\\\text {Unit carrying cost per year }& \$ 2.00 \\\text { Annual unit demand}&3,200\\\text {Safety stock }&80\\\text {Average daily demand }&10\\\text {Normal lead time in days }&12\\\end{array}$


-Refer to the figure.What is the economic order quantity for this item?

A)16 units
B)400 units
C)500 units
D)160,000 units

Question 6

What does economic order quantity do?

A)minimizes the total costs of ordering and carrying inventory
B)maximizes the stockout costs
C)minimizes the costs of ordering
D)maximizes the cost of carrying inventory

Question 7

Which of the following costs are considered in the EOQ model?

A)ordering costs and carrying costs
B)selling costs and carrying costs
C)selling costs and production costs
D)ordering costs and production costs

Question 8

Which of the following is a carrying cost?

A)receiving costs
B)insurance
C)clerical costs of preparing documents
D)insurance costs on shipment

Question 9

Air Frame Corporation increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total annual ordering costs?

A)increase
B)no change
C)decrease
D)substantial increase

Question 10

Which of the following is a carrying cost?

A)cost of funds tied up in inventory
B)cost of processing an order
C)cost of preparing equipment for production
D)cost of idled production facilities

Question 11

Which of the following costs is included in the cost of acquiring inventory?

A)setup costs for goods produced internally
B)cost of insurance on the warehouse for inventory
C)cost of not having a product when a customer wants one
D)cost of obsolescence

Question 12

If inventory consists of goods produced internally,what are the inventory-related costs?

A)ordering and production costs
B)setup costs and carrying costs
C)ordering and setup costs
D)production and carrying costs

Question 13

Big Bus Company produces buses. In order to produce the seats for the buses, special equipment must be set up. The setup cost per frame is $40. The cost of carrying seats in inventory is $5 per seat per year. The company produces 100,000 buses per year.

-Refer to the figure.What are the total carrying costs (rounded to the nearest dollar)associated with the economic order quantity?

A)$316
B)$506
C)$3,163
D)$3,613

Question 14

One of the traditional reasons for holding inventory is to minimize total carrying costs and setup costs.What is the JIT solution meant to do?

A)reduce setup costs
B)reduce lead time
C)use total preventive maintenance
D)use total quality control

Question 15

The ordering of small,frequent orders minimizes which of the following costs?

A)stockout costs
B)ordering costs
C)carrying costs
D)production costs

Question 16

Big Bus Company produces buses.In order to produce the seats for the buses,special equipment must be set up.The setup cost per frame is $40.The cost of carrying seats in inventory is $5 per seat per year.The company produces 100,000 buses per year. What is the number of seats that should be produced per setup in order to minimize the total setup and carrying costs?

A)566 seats
B)894 seats
C)1,265 seats
D)2,828 seats

Question 17

Which of the following is not a cost readily identified with inventory management?

A)cost of selling inventory
B)cost of not having stock on hand
C)cost of holding inventory
D)cost of acquiring inventory

Question 18

Which of the following is considered an ordering cost?

A)insurance on the inventory
B)the opportunity cost of funds invested in inventory
C)storage costs
D)unloading costs

Question 19

What is the term for the cost of holding inventory?

A)ordering cost
B)setup cost
C)stock-out cost
D)carrying cost

Question 20

What is the term for the cost of preparing equipment and facilities so they can be used to produce a particular product or component?

A)ordering costs
B)setup costs
C)carrying costs
D)inventory costs

Question 21

eal Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}\text { Cost of placing an order } & \$ 32.00 \\\text { Unit carrying cost per year } & \$ 4.00 \\\text { Annual unit demand } & 5,625 \\\text { Safety stock } & 100 \\\text { Average daily demand } & 25 \\\text { Normal lead time in days } & 10\end{array}$


-Refer to the figure.If there is a delay in shipping the item,approximately how many days can be covered by the safety stock?

A)4 days
B)25 days
C)30 days
D)100 days

Question 22

Burley Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}\text { Cost of placing an order}&\$ 50.00\\\text {Unit carrying cost per year }& \$ 2.00 \\\text { Annual unit demand}&3,200\\\text {Safety stock }&80\\\text {Average daily demand }&10\\\text {Normal lead time in days }&12\\\end{array}$


-Refer to the figure.If there is a delay in shipping the item,approximately how many days can be covered by the safety stock?

A)0.83 days
B)6.67 days
C)8.00 days
D)40 days

Question 23

Willie Manufacturing Company increased the size of several inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total amount of annual carrying and ordering costs?

A)increase
B)no change
C)decrease
D)substantial decrease

Question 24

Waterhouse Company decreased the size of inventory order quantities that had previously been determined using the EOQ model.If demand remains the same,what is the impact on the number of orders made during the year?

A)increase
B)no change
C)decrease
D)substantial decrease

Question 25

eal Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}\text { Cost of placing an order } & \$ 32.00 \\\text { Unit carrying cost per year } & \$ 4.00 \\\text { Annual unit demand } & 5,625 \\\text { Safety stock } & 100 \\\text { Average daily demand } & 25 \\\text { Normal lead time in days } & 10\end{array}$


-Refer to the figure.What is the reorder point for the inventory item?

A)250 units
B)350 units
C)600 units
D)1,500 units

Question 26

Burley Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}\text { Cost of placing an order}&\$ 50.00\\\text {Unit carrying cost per year }& \$ 2.00 \\\text { Annual unit demand}&3,200\\\text {Safety stock }&80\\\text {Average daily demand }&10\\\text {Normal lead time in days }&12\\\end{array}$


-Refer to the figure.What is the cost of placing an order?

A)$2
B)$8
C)$25
D)$200

Question 27

eal Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}\text { Cost of placing an order } & \$ 32.00 \\\text { Unit carrying cost per year } & \$ 4.00 \\\text { Annual unit demand } & 5,625 \\\text { Safety stock } & 100 \\\text { Average daily demand } & 25 \\\text { Normal lead time in days } & 10\end{array}$


-Refer to the figure.What is the economic order quantity for this item?

A)75 units
B)300 units
C)600 units
D)900,000 units

Question 28

Burley Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}\text { Cost of placing an order}&\$ 50.00\\\text {Unit carrying cost per year }& \$ 2.00 \\\text { Annual unit demand}&3,200\\\text {Safety stock }&80\\\text {Average daily demand }&10\\\text {Normal lead time in days }&12\\\end{array}$


-Refer to the figure.The company operates 200 days a year,the lead time for the item is 10 days,and the safety stock is 100 units.What is the reorder point?

A)70 units
B)100 units
C)170 units
D)1,000 units

Question 29

How does JIT reduce lead times to meet delivery dates?

A)by reducing setup times
B)by expediting delivery to customers
C)by having more inventory available
D)by working overtime to fill orders

Question 30

Burley Company has the following information available concerning one of its inventory items:
$\begin{array}{lr}\text { Cost of placing an order}&\$ 50.00\\\text {Unit carrying cost per year }& \$ 2.00 \\\text { Annual unit demand}&3,200\\\text {Safety stock }&80\\\text {Average daily demand }&10\\\text {Normal lead time in days }&12\\\end{array}$


-Refer to the figure.What is the reorder point for the inventory item?

A)200 units
B)320 units
C)500 units
D)970 units

Question 31

Which of the following are strategic objectives of JIT?

A)increasing inventory
B)improving a firm's competitive position
C)increasing inventory cost
D)improving a firm's non-value-added activities

Question 32

Refer to the figure.If the company operates 200 days a year and the lead time for the item is five days,what is the reorder point if a safety stock of 50 units is maintained?

A)4 days
B)25 units
C)50 units
D)175 units

Question 33

How are the objectives of JIT achieved?

A)by controlling costs,improving delivery performance,increasing quality costs
B)by controlling costs,increasing delivery times,improving quality
C)by controlling prices,improving delivery performance,improving quality
D)by controlling costs,improving delivery performance,improving quality

Question 34

What order quantity is used in the EOQ model?

A)the quantity of inventory ordered during one year
B)the quantity of inventory ordered for one job
C)the quantity of inventory ordered for one department
D)the quantity of inventory ordered at one time

Question 35

In the economic order quantity equation,what does the numerator under the square root include?

A)annual demand and cost of placing an order
B)annual demand and unit carrying cost
C)unit carrying cost and cost of placing an order
D)order quantity and cost of placing an order

Question 36

Waterhouse Company decreased the size of inventory order quantities that had previously been determined using the EOQ model.What is the impact on the total amount of annual carrying and ordering costs?

A)increase
B)no change
C)decrease
D)substantial increase

Question 37

What does the economic order quantity measure?

A)the minimum total annual inventory costs
B)the maximum total annual inventory costs
C)no inventory shortages
D)minimum ordering costs

Question 38

What is the reorder point in the EOQ model?

A)the day of the month for reordering
B)when all of the inventory has been used
C)when the inventory level is below the order quantity
D)the inventory level at which an order for additional units is placed

Question 39

Which of the following equations determines the total annual carrying costs when no safety stock is kept?

A)Cost of placing an order * Order quantity
B)Cost of placing an order * Number of orders per year
C)Cost of placing an order * One-half of the order quantity
D)Unit carrying costs per year * One-half of the order quantity

Question 40

Which of the following elements could be determined by using the economic order quantity formula?

A)optimum size of production run
B)reorder point
C)safety stock
D)annual demand

Question 41

What is the correct order for the four steps that must be followed to solve problems graphically?

A)(1)Graph each constraint,(2)identify the feasible set of solutions,(3)identify all the corner-point values in the feasible set,(4)select the corner point that yields the largest value for the objective function.
B)(1)Identify the feasible set of solutions,(2)graph each constraint,(3)identify all the corner-point values in the feasible set,(4)select the corner point that yields the largest value for the objective function.
C)(1)Identify the feasible set of solutions,(2)identify all the corner-point values in the feasible set,(3)graph each constraint,(4)select the corner point that yields the largest value for the objective function.
D)(1)Graph each constraint,(2)identify all the corner-point values in the feasible set,(3)identify the feasible set of solutions,(4)select the corner point that yields the largest value for the objective function.

Question 42

One of the traditional reasons for holding inventory is to avoid shutdowns due to defective parts.What is the JIT solution meant to do?

A)reduce setup costs
B)reduce lead time
C)use total preventive maintenance
D)use total quality control

Question 43

How are finished goods inventories treated with JIT manufacturing?

A)They are kept high to avoid stockouts.
B)They are held in various locations for faster delivery to customers.
C)They are insignificant.
D)They are kept high to let the company take advantage of volume discounts.

Question 44

Which of the following is a common reason for shutdowns?

A)safety stock of inventory
B)zero-defect materials
C)machine maintenance
D)unavailability of a material of subassembly

Question 45

How does JIT prevent shutdowns due to materials shortage?

A)by maintenance only when needed
B)by holding inventory
C)by using total quality control to reduce defective materials
D)by working with suppliers to ensure the availability of materials

Question 46

One of the traditional reasons for holding finished goods inventories is to ensure a firm's ability to meet delivery dates.What is the JIT solution meant to do?

A)reduce setup costs
B)reduce lead time
C)use total preventive maintenance
D)use total quality control

Question 47

What makes JIT superior to the traditional approach of inventory management?

A)The traditional approach accepts the existence of setup costs,but not carrying costs or inventories.JIT accepts the existence of setup and carrying costs,but pushes for zero inventories.
B)The traditional approach accepts the existence of carrying costs and inventories,but not setup costs.JIT accepts the existence of setup costs but not carrying costs and pushes for zero inventories.
C)The traditional approach accepts the existence of both setup costs and carrying costs and attempts to find the order quantity that best balances those costs.JIT does not accept either setup costs or carrying costs and pushes for zero inventory levels.
D)The traditional approach does not accept carrying costs or setup costs.JIT minimizes both setup and carrying costs by finding the best order quantity to balance these costs.

Question 48

How is JIT purchasing done?

A)using short-term contracts emphasizing price
B)using long-term contracts based on quality,reliability,and price
C)using short-term contracts based on quality,reliability,and price
D)using inventory to hedge against stockouts and price increases

Question 49

What is the term for a marker or card that specifies the quantity that the preceding process should manufacture?

A)a production Kanban
B)a vendor Kanban
C)a withdrawal Kanban
D)a deposit Kanban

Question 50

What does a withdrawal Kanban specify?

A)how much should be produced to replace inventory
B)the quantity that a subsequent process should withdraw from the preceding process
C)when customers should be notified to pick up orders
D)when suppliers should be notified to deliver more parts

Question 51

The following information is available for Wilson Trailer Company, which sells two products:
$$\begin{array} { l c c } & \text { Trailer A } & \text { Trailer B } \\\text { Pracessing time } & 2 \text { hours } & 4 \text { hours } \\\text { Vinyl cover used } & 16 \text { s. metres } & 12 \text { sq. metres } \\\text { Selling price } & \$ 50.00 & \$ 80.00 \\\text { Variable cost } & \$ 35.00 & \$ 50.00 \\\text { Fixed cost } & \$ 10.00 & \$ 20.00\end{array}$$ There are 100 hours available in the plant and 75 square metres of vinyl available per operating period.

-Refer to the figure.Which statement best describes the relationship between these products?

A)The materials constraint favours Trailer B over Trailer A.
B)The time constraint favours Trailer B over Trailer A.
C)The material constraint favours Trailer A over Trailer B.
D)The objective function favours Trailer A over Trailer B.

Question 52

One of the traditional reasons for holding inventory is to avoid shutdowns due to unavailability of materials.What is the JIT solution meant to do?

A)reduce setup costs
B)reduce lead time
C)use total preventive maintenance
D)use long-term contracts with suppliers

Question 53

One of the traditional reasons for holding inventory is to avoid a shutdown due to machine failure.What is the JIT solution meant to do?

A)reduce setup costs.
B)reduce lead time.
C)use total preventive maintenance.
D)use total quality control.

Question 54

What is the definition of a loose constraint?

A)a constraint where the limiting factor is machine hours or labour availability
B)a constraint where the limiting factor could be something like market demand
C)a constraint where a product mix uses all of the limited resources of the constraint
D)a constraint whose limited resources are not fully used by a product mix

Question 55

What is the term for a marker or card that signals to a supplier the quantity of materials that need to be delivered and the time of delivery?

A)a production Kanban
B)a vendor Kanban
C)a withdrawal Kanban
D)a deposit Kanban

Question 56

Heft Company produces A and B with contribution margins per unit of $40 and $30,respectively.Only 500 labour hours and 300 machine hours are available for production. Time requirements to produce one unit of A and B are as follows:
$\begin{array}{lcc}&\text {Product A }&\text {Product E}\\ \text { Labour hours per unit } &5&2\\ \text { Machine hours per unit } &1&4\\\end{array}$
What is the constraint on machine hours for Heft Company?

A)1A + 4B $\le$ 300
B)1A + 4B $\le$ 500
C)5A + 2B $\le$ 500
D)40A + 30B $\le$ 500

Question 57

What is the purpose of the Kanban system?

A)to ensure parts or materials are available when needed
B)to signal when preventive maintenance is needed
C)to signal when a defective unit has been produced
D)to ensure idle time of workers is not wasted

Question 58

One of the traditional reasons for holding inventory is to take advantage of quantity discounts and hedge against future price increases.What is the JIT solution meant to do?

A)reduce setup costs
B)reduce lead time
C)use long-term contracts with suppliers
D)use total quality control

Question 59

What is the term for a marker or card that specifies the quantity that a subsequent process should take from a preceding process?

A)a production Kanban
B)a vendor Kanban
C)a withdrawal Kanban
D)a deposit Kanban

Question 60

If the objective is to maximize profits in a linear programming problem,what should be the coefficients of the variables in the objective function?

A)the selling price per unit
B)the variable costs per unit
C)the contribution margin per unit
D)the fixed costs per unit

Question 61

A linear programming problem has an objective function of 10X + 12Y.If the optimal solution provided by the model is to produce and sell 400 units of X and 1,000 units of Y,what is the expected return?

A)$1,400
B)$14,800
C)$16,000
D)$40,800

Question 62

A linear programming problem has the following objective function: 20X + 40Y + 60Z. If the optimal solution provided by the model is to produce and sell 100,200,and 300 units of X,Y,and Z,respectively,what is the expected return?

A)$120
B)$24,000
C)$28,000
D)$36,000

Question 63

Which of the following would be included in a linear programming model?

A)independent variables,dependant variables,and objective function
B)independent variables,networks,and objective function
C)independent variables,dependant variables,and networks
D)networks,dependant variables,and objective function

Question 64

Tiffany Manufacturing Company produces X and Y with contribution margins per unit of $10 and $90, respectively. Only 200 labour hours and 400 machine hours are available for production.
Time requirements to produce one unit of X and Y are as follows:
$$\begin{array} { l c c } & \text { Product X } & \text { Product Y } \\\text { Labour hours per unit } & 1 & 2 \\\text { Machine hours per unit } & 5 & 1\end{array}$$

-Refer to the figure.What is the constraint on labour hours for Tiffany Manufacturing Company?

A)1X + 2Y $\leq$ 200
B)1X + 2Y $\leq$ 400
C)1X + 4Y $\leq$ 400
D)10X + 90Y $\leq$ 10 200

Question 65

Using the graphic approach to linear programming,what is usually the solution?

A)a corner point where two or more constraints intersect
B)where the lines intersect farthest from zero
C)the point farthest from the Y-axis
D)the point farthest from the X-axis

Question 66

The following information is available for Wilson Trailer Company, which sells two products:
$\begin{array}{lcc}&\text { Trailer A } &\text { Trailer B} \\\text { Processing time } & 2 \text { hours } & 4 \text { hours } \\\text { Vinyl cover used } & 16 \mathrm{sq} \cdot \mathrm{m} . & 12 \mathrm{sq} . \mathrm{m} . \\\text { Selling price } & \$ 50.00 & \$ 80.00 \\\text { Variable cost } & \$ 35.00 & \$ 50.00 \\\text { Fixerl cost } & \$ 10.00 & \$ 20.00\end{array}$ There are 100 hours available in the plant and 75 square metres of vinyl available per operating period.

-Refer to the figure.Which of the following statements represent the information in the table? 1. The materials constraint favours Trailer B over Trailer A.
2. The time constraint favours Trailer A over Trailer $B$ .
3. The material constraint favours Trailer A over Trailer B.
4. The objective function favours Trailer B over Trailer A.

A)1 and 2
B)2 and 3
C)3 and 4
D)1 and 3

Question 67

The following information is available for Walters Furniture Company, which sells two products:
$\begin{array}{lcr}&\text { Table X}&\text { Table Y}\\\text { Processing time } & 4 \text { hours } & 6 \text { hours } \\\text { Metal used } & 30 \mathrm{sq} \cdot \mathrm{m} . & 18 \mathrm{sq} . \mathrm{m} \\\text { Selling price } & \$ 200.00 & \$ 100.00 \\\text { Variable cost } & \$ 150.00 & \$ 60.00 \\\text { Fixed cost. } & \$ 30 . \mathrm{n} 0 & \$ 30.00\end{array}$ There are 200 hours available in the plant and 200 square metres of metal available per operating period.

-Refer to the figure.What is the objective function for maximizing sales?

A)Maximize 50X + 40Y
B)Maximize 180X + 90Y
C)Maximize 200X + 100Y
D)Minimize 200X + 100Y

Question 68

Hassel Company manufactures two different products, X and Y. The company has 100 kilograms of materials and 300 direct labour hours available for production.
The time requirements and contribution margins per unit are as follows:
$\begin{array}{lcc}&\text {Product X}&\text {Product Y}\\\text { Contribution margin per unit } & \$ 4 & \$ 5 \\\text { Materials per unit (kg) } & 1 & 2 \\\text { Direct labour hours per unit } & 4 & 2\end{array}$

-Refer to the figure.What is the objective function for maximizing profits?

A)Maximize $1X + $2Y
B)Maximize $4X + $2Y
C)Maximize $4X + $5Y
D)Minimize $4X + $5Y

Question 69

What is the shadow price?

A)the price that indicates the amount by which throughput will increase for one unit of unconstrained resource
B)the price paid on the black market for one unit of scarce resource
C)the price paid for a scarce resource from an external provider
D)the price that indicates the amount by which contribution margin will increase for one unit of scarce resource

Question 70

The following information is available for Wilson Trailer Company, which sells two products:
$\begin{array}{lcc}&\text { Trailer A } &\text { Trailer B} \\\text { Processing time } & 2 \text { hours } & 4 \text { hours } \\\text { Vinyl cover used } & 16 \mathrm{sq} \cdot \mathrm{m} . & 12 \mathrm{sq} . \mathrm{m} . \\\text { Selling price } & \$ 50.00 & \$ 80.00 \\\text { Variable cost } & \$ 35.00 & \$ 50.00 \\\text { Fixerl cost } & \$ 10.00 & \$ 20.00\end{array}$ There are 100 hours available in the plant and 75 square metres of vinyl available per operating period.

-Refer to the figure.What is the objective function for maximizing profits?

A)Maximize $15A + $30B
B)Minimize $15A + $30B
C)Maximize $35A + $50B
D)Maximize $50A + $80B

Question 71

Tiffany Manufacturing Company produces X and Y with contribution margins per unit of $10 and $90, respectively. Only 200 labour hours and 400 machine hours are available for production.
Time requirements to produce one unit of X and Y are as follows:
$$\begin{array} { l c c } & \text { Product X } & \text { Product Y } \\\text { Labour hours per unit } & 1 & 2 \\\text { Machine hours per unit } & 5 & 1\end{array}$$

-Refer to the figure.What is the constraint on machine hours for Tiffany Manufacturing Company?

A)1X + 2Y $\leq$ 200
B)1X + 2Y $\leq$ 400
C)5X + 1Y $\leq$ 400
D)10X + 90Y $\leq$ 200

Question 72

The following information is available for Walters Furniture Company, which sells two products:
$\begin{array}{lcr}&\text { Table X}&\text { Table Y}\\\text { Processing time } & 4 \text { hours } & 6 \text { hours } \\\text { Metal used } & 30 \mathrm{sq} \cdot \mathrm{m} . & 18 \mathrm{sq} . \mathrm{m} \\\text { Selling price } & \$ 200.00 & \$ 100.00 \\\text { Variable cost } & \$ 150.00 & \$ 60.00 \\\text { Fixed cost. } & \$ 30 . \mathrm{n} 0 & \$ 30.00\end{array}$ There are 200 hours available in the plant and 200 square metres of metal available per operating period.

-Refer to the figure.What is the constraint equation representing processing time available?

A)4X + 6Y $\leq$ 200
B)4X + 6Y $\geq$ 200
C)4X + 6Y $\leq$ 400
D)30X + 18Y $\leq$ 200

Question 73

Tiffany Manufacturing Company produces X and Y with contribution margins per unit of $10 and $90, respectively. Only 200 labour hours and 400 machine hours are available for production.
Time requirements to produce one unit of X and Y are as follows:
$$\begin{array} { l c c } & \text { Product X } & \text { Product Y } \\\text { Labour hours per unit } & 1 & 2 \\\text { Machine hours per unit } & 5 & 1\end{array}$$

-Refer to the figure.What is the objective function to maximize profits for Tiffany Manufacturing Company?

A)Maximize 1X + 2Y
B)Maximize 10X + 90Y
C)Minimize 1X + 2Y
D)Minimize 10X + 90Y

Question 74

Heft Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labour hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:
$$\begin{array} { l c c c } & \text { Product A } & \text { Praduct B } \\\text { Labour hours per unit }& 5 & 2 \\\text { Machine hours per unit } & 1 & 4\end{array}$$

-Refer to the figure.What is the objective function to maximize profits for Heft Company?

A)Maximize 1A + 4B
B)Minimize 5A + 2B
C)Maximize 40A + 30B
D)Minimize 40A + 30B

Question 75

Hassel Company manufactures two different products, X and Y. The company has 100 kilograms of materials and 300 direct labour hours available for production.
The time requirements and contribution margins per unit are as follows:
$\begin{array}{lcc}&\text {Product X}&\text {Product Y}\\\text { Contribution margin per unit } & \$ 4 & \$ 5 \\\text { Materials per unit (kg) } & 1 & 2 \\\text { Direct labour hours per unit } & 4 & 2\end{array}$

-Refer to the figure.What is the equation for the constraint on direct labour?

A)$1X + $2Y $\leq$ 300
B)$4X + $2Y $\leq$ 100
C)$4X + $2Y $\leq$ 300
D)$4X + $5Y $\leq$ 100

Question 76

Heft Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labour hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:
$$\begin{array} { l c c c } & \text { Product A } & \text { Praduct B } \\\text { Labour hours per unit }& 5 & 2 \\\text { Machine hours per unit } & 1 & 4\end{array}$$

-Refer to the figure.What is the constraint on machine hours for Heft Company?

A)1A + 4B $\leq$ 300
B)1A + 4B $\leq$ 500
C)5A + 2B $\leq$ 500
D)40A + 30B $\leq$ 500

Question 77

Heft Company produces A and B with contribution margins per unit of $40 and $30, respectively. Only 500 labour hours and 300 machine hours are available for production.
Time requirements to produce one unit of A and B are as follows:
$$\begin{array} { l c c c } & \text { Product A } & \text { Praduct B } \\\text { Labour hours per unit }& 5 & 2 \\\text { Machine hours per unit } & 1 & 4\end{array}$$

-Refer to the figure.What is the constraint on labour hours for Heft Company?

A)1A + 4B $\leq$ 300
B)5A + 1B $\leq$ 500
C)5A + 2B $\leq$ 500
D)40A + 30B $\leq$ 500

Question 78

In the graphic method of solving a linear programming problem,which of the following is depicted on the graph?

A)coefficient of correlation
B)constraint
C)least-squares line of best fit
D)break-even point

Question 79

The following information is available for Wilson Trailer Company, which sells two products:
$\begin{array}{lcc}&\text { Trailer A } &\text { Trailer B} \\\text { Processing time } & 2 \text { hours } & 4 \text { hours } \\\text { Vinyl cover used } & 16 \mathrm{sq} \cdot \mathrm{m} . & 12 \mathrm{sq} . \mathrm{m} . \\\text { Selling price } & \$ 50.00 & \$ 80.00 \\\text { Variable cost } & \$ 35.00 & \$ 50.00 \\\text { Fixerl cost } & \$ 10.00 & \$ 20.00\end{array}$ There are 100 hours available in the plant and 75 square metres of vinyl available per operating period.

-Refer to the figure.What is the constraint equation representing the materials available for the production processes?

A)2A + 4B $\geq$ 100
B)2A + 4B = 200
C)16A + 12B = 75
D)16A + 12B $\leq$ 75

Question 80

Hassel Company manufactures two different products, X and Y. The company has 100 kilograms of materials and 300 direct labour hours available for production.
The time requirements and contribution margins per unit are as follows:
$\begin{array}{lcc}&\text {Product X}&\text {Product Y}\\\text { Contribution margin per unit } & \$ 4 & \$ 5 \\\text { Materials per unit (kg) } & 1 & 2 \\\text { Direct labour hours per unit } & 4 & 2\end{array}$

-Refer to the figure.What is the equation for the constraint on materials?

A)$1X + $2Y $\leq$ 100
B)$4X + $2Y $\leq$ 100
C)$4X + $5Y $\leq$ 100
D)$4X + $5Y $\leq$ 300