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Exam 13: Inventory Management

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Question 41

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One important use of inventories in manufacturing is to decouple operations through the use of work in process inventories.

A) True
B) False

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Question 42

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The single-period model can be very helpful in determining when to order.

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B) False

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Question 43

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Because price isn't a factor in the EOQ formula, quantity discounts won't affect EOQ calculations.

A car rental agency uses 96 boxes of staples a year.The boxes cost $4 each.It costs $10 to order staples, and carrying costs are $0.80 per box on an annual basis. Determine: (A) the order quantity that will minimize the sum of ordering and holding boxes of staples (B) the annual cost of ordering and carrying the boxes of staples

The larger the number of orders placed, the larger the average level of inventory.

A service garage uses 120 boxes of cleaning cloths a year.The boxes cost $6 each.Ordering cost is $3 and holding cost is 10 percent of purchase cost per unit on an annual basis. Determine: (A) The economic order quantity (B) The total cost of carrying the cloths (excluding purchase price) (C) The average inventory

The cost of placing an order is a function of order size.

If she were to order 6,000 bills at a time, what would be the average monthly total costs, EXCLUDING the value of the bills?

In a single-period model, if shortage cost is four times excess cost, then the optimum service level is ___ percent.

A risk avoider would want ______ safety stock.

At what point should he reorder Stein beer?

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

The fixed-order interval model requires a larger amount of safety stock than the ROP model for the same risk of a stockout.

It is critical that the exact quantity calculated in the EOQ model be ordered.

Which one of these would not be a factor in determining the reorder point?

The single-period model can be very helpful in determining how much to order.

The EOQ should be regarded as an approximate quantity rather than an exact quantity.Thus, rounding the calculated value is acceptable.

Carrying cost is a function of order size; the larger the order, the higher the inventory carrying cost.

A fill rate is the percentage of _____ filled by stock on hand.

If order size was 1,000 kilograms of resin, what would be the length of an order cycle?