Question 1

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) A) and B)
G) All of the above

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

When developing an inventory policy,the only relevant costs are the variable costs

Accepted Answer

A) True 
 B)False

Question 4

Setup costs can occur through purchasing or manufacturing products

Accepted Answer

A) True 
 B)False

Question 5

What is the EOQ for pepperoni?

Accepted Answer

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

Question 6

Which of the following is not considered a holding cost?

Accepted Answer

A)  Interest 
B)  Insurance 
C)  Depreciation 
D)  Opportunity cost 
E)  Stockout cost F) B) and D)
G) C) and D)

Question 7

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 F) B) and D)
G) C) and D)

Question 8

Subassemblies are an example of independent demand items

Accepted Answer

A) True 
 B)False

Question 9

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 F) A) and E)
G) B) and E)

Question 10

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 F) B) and E)
G) A) and D)

Question 11

Which of the following would generally have independent demand?

Accepted Answer

A)  Subassemblies 
B)  Component parts 
C)  Finished goods 
D)  All of these 
E)  None of these F) B) and E)
G) B) and D)

Question 12

refer to the following:
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.
-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 F) B) and C)
G) A) and C)

Question 13

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 F) D) and E)
G) C) and E)

Question 14

The JIT philosophy recognizes that inventories are a necessary investment

Accepted Answer

A) True 
 B)False

Question 15

The EOQ approach minimizes annual setup costs

Accepted Answer

A) True 
 B)False

Question 16

Annual setup cost is a function of order size

Accepted Answer

A) True 
 B)False

Question 17

Estimating shortage costs is quite challenging because it is difficult to predict the consequences of shortages

Accepted Answer

A) True 
 B)False

Question 18

An inventory system whose current inventory level is monitored with each change is called a periodic-review system

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is not included in setup costs?

Accepted Answer

A)  Typing up invoices 
B)  Moving delivered goods to temporary storage 
C)  Inspecting incoming goods for quality 
D)  Taking an inventory to determine how much is needed 
E)  Temporary storage of delivered goods F) All of the above
G) D) and E)

Question 20

EOQ inventory models are basically concerned with the timing of orders

Accepted Answer

A) True 
 B)False

Exam 18: Inventory management with known demand

Annual setup cost is a function of order size

Correct Answer
verified

The EOQ approach minimizes annual setup costs

Correct Answer
verified

What is the EOQ for pepperoni?

Correct Answer
verified

Which of the following would generally have independent demand?

Correct Answer
verified

The JIT philosophy recognizes that inventories are a necessary investment

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Setup costs can occur through purchasing or manufacturing products

Correct Answer
verified

An inventory system whose current inventory level is monitored with each change is called a periodic-review system

Correct Answer
verified

EOQ inventory models are basically concerned with the timing of orders

Correct Answer
verified

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

Correct Answer
verified

When developing an inventory policy,the only relevant costs are the variable costs

Correct Answer
verified

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:

Correct Answer
verified

Which of the following is not included in setup costs?

Correct Answer
verified

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 Answer
verified

Estimating shortage costs is quite challenging because it is difficult to predict the consequences of shortages

Correct Answer
verified

Which of the following is not considered a holding cost?

Correct Answer
verified

Correct Answer
verified

An inventory management strategy should work towards:

Correct Answer
verified

Subassemblies are an example of independent demand items

Correct Answer
verified

Exam 18: Inventory management with known demand

Annual setup cost is a function of order size

Correct AnswerverifiedShow Answer

The EOQ approach minimizes annual setup costs

Correct AnswerverifiedShow Answer

What is the EOQ for pepperoni?

Correct AnswerverifiedShow Answer

Which of the following would generally have independent demand?

Correct AnswerverifiedShow Answer

The JIT philosophy recognizes that inventories are a necessary investment

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Setup costs can occur through purchasing or manufacturing products

Correct AnswerverifiedShow Answer

An inventory system whose current inventory level is monitored with each change is called a periodic-review system

Correct AnswerverifiedShow Answer

EOQ inventory models are basically concerned with the timing of orders

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When developing an inventory policy,the only relevant costs are the variable costs

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

Which of the following is not included in setup costs?

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

Estimating shortage costs is quite challenging because it is difficult to predict the consequences of shortages

Correct AnswerverifiedShow Answer

Which of the following is not considered a holding cost?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

An inventory management strategy should work towards:

Correct AnswerverifiedShow Answer

Subassemblies are an example of independent demand items

Correct AnswerverifiedShow Answer

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