Question 1

What is the EOQ for beer?

Accepted Answer

A)  4 cases.
B)  8 cases.
C)  10 cases.
D)  20 cases.
E)  80 cases.Ann Chovies,owner of the Perfect Pasta Pizza Parlor,uses 20 pounds of pepperoni each day in preparing pizzas.Order costs for pepperoni are $10 per order,and holding costs are 4 cents per pound per day.Lead time for each order is 3 days,and the pepperoni itself costs $3 per pound.F) A) and D)
G) B) and D)

Question 2

JIT refers to a production system in which goods arrive for processing just as the preceding batch is completed.

Accepted Answer

A) True 
 B)False

Question 3

In the basic EOQ model,annual holding cost is one-half of the total annual cost.

Accepted Answer

A) True 
 B)False

Question 4

Interest,insurance,and opportunity costs are all associated with holding costs.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not an assumption of the EOQ model with planned shortages?

Accepted Answer

A)  Demand is constant.
B)  Each order is received all at once.
C)  Orders are received just when desired.
D)  When a shortage occurs,customers are lost.
E)  All are assumptions.F) B) and E)
G) A) and C)

Question 6

At what point should she reorder pepperoni?

Accepted Answer

A)  20 pounds remaining.
B)  40 pounds remaining.
C)  60 pounds remaining.
D)  80 pounds remaining.
E)  100 pounds remaining.F) B) and C)
G) B) and D)

Question 7

An inventory management strategy should work towards:

Accepted Answer

A)  increasing order sizes.
B)  decreasing order sizes.
C)  increasing safety stocks.
D)  increasing demand.
E)  None of the above.The manager of the Quick Stop Corner Convenience Store (which never closes) sells four cases of beer each day.Ordering costs are $8 per order,and beer costs $0.80 per six-pack (each case of beer contains four six-packs) .Orders arrive three days from the time they are placed.Daily holding costs are equal to 5% of the cost of the beer.F) A) and B)
G) A) and C)

Question 8

The average inventory level and the number of orders per year are inversely related.As one increases,the other decreases.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following products would be most likely to have dependent demand?

Accepted Answer

A)  Refrigerators.
B)  Car engines.
C)  TVs.
D)  Brownies.
E)  None of the above.F) A) and E)
G) C) and D)

Question 10

Total cost in the EOQ model with quantity discounts is calculated in the same way as it is in the basic EOQ model.

Accepted Answer

A) True 
 B)False

Question 11

If the manager was to order 16 cases of beer at a time,what would be the length of an order cycle?

Accepted Answer

A)  0.25 days.
B)  3 days.
C)  1 day.
D)  4 days.
E)  20 days.F) C) and D)
G) B) and E)

Question 12

The total cost curve is relatively flat near the EOQ.

Accepted Answer

A) True 
 B)False

Question 13

An example of an inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

Accepted Answer

A) True 
 B)False

Question 14

Using the basic EOQ model,the higher an item's holding costs,the more frequently it will be ordered.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not one of the assumptions of the basic EOQ model?

Accepted Answer

A)  Demand rates are constant.
B)  Orders arrive just when desired.
C)  Each order is received in a single delivery.
D)  Quantity discounts are available.
E)  All of the above are necessary assumptions.F) A) and E)
G) B) and D)

Question 16

Holding costs are a function of order size.

Accepted Answer

A) True 
 B)False

Question 17

In the EOQ model with quantity discounts,the optimum quantity will always be found on the lowest cost curve.

Accepted Answer

A) True 
 B)False

Question 18

The introduction of quantity discounts will cause the optimum order quantity to be:

Accepted Answer

A)  smaller.
B)  unchanged.
C)  greater.
D)  smaller or unchanged.
E)  unchanged or greater.F) A) and E)
G) A) and D)

Question 19

In order to achieve JIT,inventories must be minimized.

Accepted Answer

A) True 
 B)False

Question 20

In the basic EOQ model,an annual demand of 40 units,a setup cost of $5,and a holding cost of $1/unit per year will result in an EOQ of:

Accepted Answer

A)  20.
B)  square root of 200.
C)  200.
D)  400.
E)  None of the above.F) B) and D)
G) All of the above

Exam 21: CD - Inventory Management With Known Demand

Which of the following is not an assumption of the EOQ model with planned shortages?

Correct AnswerverifiedShow Answer

Using the basic EOQ model,the higher an item's holding costs,the more frequently it will be ordered.

Correct AnswerverifiedShow Answer

An inventory management strategy should work towards:

Correct AnswerverifiedShow Answer

JIT refers to a production system in which goods arrive for processing just as the preceding batch is completed.

Correct AnswerverifiedShow Answer

In the EOQ model with quantity discounts,the optimum quantity will always be found on the lowest cost curve.

Correct AnswerverifiedShow Answer

Holding costs are a function of order size.

Correct AnswerverifiedShow Answer

In order to achieve JIT,inventories must be minimized.

Correct AnswerverifiedShow Answer

What is the EOQ for beer?

Correct AnswerverifiedShow Answer

In the basic EOQ model,an annual demand of 40 units,a setup cost of $5,and a holding cost of $1/unit per year will result in an EOQ of:

Correct AnswerverifiedShow Answer

An example of an inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

Correct AnswerverifiedShow Answer

The introduction of quantity discounts will cause the optimum order quantity to be:

Correct AnswerverifiedShow Answer

Total cost in the EOQ model with quantity discounts is calculated in the same way as it is in the basic EOQ model.

Correct AnswerverifiedShow Answer

In the basic EOQ model,annual holding cost is one-half of the total annual cost.

Correct AnswerverifiedShow Answer

Which of the following is not one of the assumptions of the basic EOQ model?

Correct AnswerverifiedShow Answer

If the manager was to order 16 cases of beer at a time,what would be the length of an order cycle?

Correct AnswerverifiedShow Answer

The average inventory level and the number of orders per year are inversely related.As one increases,the other decreases.

Correct AnswerverifiedShow Answer

The total cost curve is relatively flat near the EOQ.

Correct AnswerverifiedShow Answer

At what point should she reorder pepperoni?

Correct AnswerverifiedShow Answer

Which of the following products would be most likely to have dependent demand?

Correct AnswerverifiedShow Answer

Interest,insurance,and opportunity costs are all associated with holding costs.

Correct AnswerverifiedShow Answer

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