Question 1

In the EOQ model,the average inventory per cycle over many cycles is Q/2.

Accepted Answer

A) True 
 B)False

Question 2

For the EOQ model,which of the following relationships is incorrect?

Accepted Answer

A) As the order quantity increases,the number of orders placed annually decreases. 
B) As the order quantity increases,annual holding cost increases. 
C) As the order quantity increases,annual ordering cost increases. 
D) As the order quantity increases,average inventory increases. 
A) As the order quantity increases,the number of orders placed annually decreases. 
B) As the order quantity increases,annual holding cost increases. 
C) As the order quantity increases,annual ordering cost increases. 
D) As the order quantity increases,average inventory increases.

Question 3

An assumption in the economic production lot size model is that there is storage capacity to hold the entire production lot.

Accepted Answer

A) True 
 B)False

Question 4

Henderson Furniture sells reproductions of 18th century furniture.For a particular table,the assumptions of the inventory model with backorders are valid.
D = 200 tables per year
I = 25% per year
C = $800 per table
Co = $80 per order
Cb = $50 per table per year
The store is open 250 days a year.
a.What are the values for order quantity and number of planned backorders that will minimize total cost?
b.What is the maximum inventory?
c.What is the cycle time?
d.What is total cost?

Accepted Answer

a.Q* = 28.28
S* = 28.28(200/25

Question 5

At the optimal order quantity for the quantity discount model,the sum of the annual holding and ordering costs is minimized.

Accepted Answer

A) True 
 B)False

Question 6

The definition of service level used in this chapter is

Accepted Answer

A) the percentage of all demand that can be satisfied from inventory. 
B) the percentage of all order cycles that do not experience a stockout. 
C) the percentage of demand during the lead-time period that can be satisfied from inventory 
D) None of the alternatives is correct. 
A) the percentage of all demand that can be satisfied from inventory. 
B) the percentage of all order cycles that do not experience a stockout. 
C) the percentage of demand during the lead-time period that can be satisfied from inventory 
D) None of the alternatives is correct.

Question 7

The terms "inventory on hand" and "inventory position" have the same meaning.

Accepted Answer

A) True 
 B)False

Question 8

For the inventory model with planned shortages,the optimal order quantity results in

Accepted Answer

A) annual holding cost = annual ordering cost. 
B) annual holding cost = annual backordering cost. 
C) annual ordering cost = annual holding cost + annual backordering cost. 
D) annual ordering cost = annual holding cost - annual backordering cost. 
A) annual holding cost = annual ordering cost. 
B) annual holding cost = annual backordering cost. 
C) annual ordering cost = annual holding cost + annual backordering cost. 
D) annual ordering cost = annual holding cost - annual backordering cost.

Question 9

When quantity discounts are available,order an amount from the highest discount category.

Accepted Answer

A) True 
 B)False

Question 10

Inventory models in which the rate of demand is constant are called

Accepted Answer

A) fixed models. 
B) deterministic models. 
C) JIT models. 
D) requirements models. 
A) fixed models. 
B) deterministic models. 
C) JIT models. 
D) requirements models.

Question 11

In the single-period inventory model with probabilistic demand,

Accepted Answer

A) surplus items are not allowed to be carried in future inventory. 
B) co = c?u . 
C) probabilities are used to calculate expected losses. 
D) All of the alternatives are correct. 
A) surplus items are not allowed to be carried in future inventory. 
B) co = c?u . 
C) probabilities are used to calculate expected losses. 
D) All of the alternatives are correct.

Question 12

Bank Drugs sells Jami Michelle lipstick.The Jami Michelle Company offers a 6% discount on orders of at least 500 tubes,a 10% discount on orders of at least 1,000 tubes,a 12% discount on orders of at least 1,800 tubes and a 15% discount on orders at least 2,500 tubes.
Bank sells an average of 40 tubes of Jami Michelle lipstick weekly.The normal price paid by Bank drugs is $1 per tube.If it costs Bank $30 to place an order,and Bank's annual holding cost rate is 27%,determine the optimal order policy for Bank Drugs.

Accepted Answer

Order 1000

Question 13

Amazing Bakers sells bread to 40 supermarkets.It costs Amazing $1,250 per day to operate its plant.The profit per loaf of bread sold in the supermarket is $.025.Any unsold bread is returned to the Amazing Thrift Store to be sold at a loss of $.015.
a.If sales follow a normal distribution with µ = 70,000 and SYMBOL 115 \f "Symbol" = 5,000 per day,how many loaves should Amazing bake daily?
b.Amazing is considering a different sales plan for which the profit per loaf of bread sold in the supermarket is $.03 and the loss per loaf bread returned is $.018.If µ = 60,000 and SYMBOL 115 \f "Symbol" = 4,000 per day,how many loaves should Amazing bake daily?

Accepted Answer

a.71,600 l

Question 14

The objective of the EOQ with quantity discounts model is to

Accepted Answer

A) determine the minimum order quantity required for the maximum discount. 
B) balance annual ordering and holding costs. 
C) minimize annual purchase cost. 
D) minimize the sum of annual carrying,holding,and purchase costs. 
A) determine the minimum order quantity required for the maximum discount. 
B) balance annual ordering and holding costs. 
C) minimize annual purchase cost. 
D) minimize the sum of annual carrying,holding,and purchase costs.

In the EOQ model,the average inventory per cycle over many cycles is Q/2.

For the EOQ model,which of the following relationships is incorrect?

An assumption in the economic production lot size model is that there is storage capacity to hold the entire production lot.

At the optimal order quantity for the quantity discount model,the sum of the annual holding and ordering costs is minimized.

The definition of service level used in this chapter is

The terms "inventory on hand" and "inventory position" have the same meaning.

For the inventory model with planned shortages,the optimal order quantity results in

When quantity discounts are available,order an amount from the highest discount category.

Inventory models in which the rate of demand is constant are called

In the single-period inventory model with probabilistic demand,

The objective of the EOQ with quantity discounts model is to

Introduction

Introduction to Probability

Probability Distributions

Decision Analysis

Utility and Game Theory

Forecasting

Introduction to Linear Programming

Lp Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications

Distribution and Network Problems

Integer Linear Programming

Advanced Optimization Application

Project Scheduling: Pertcpm

Waiting Line Models

Simulation

Markov Processes

Filters

Exam 14: Inventory Models

In the EOQ model,the average inventory per cycle over many cycles is Q/2.

For the EOQ model,which of the following relationships is incorrect?

An assumption in the economic production lot size model is that there is storage capacity to hold the entire production lot.

At the optimal order quantity for the quantity discount model,the sum of the annual holding and ordering costs is minimized.

The definition of service level used in this chapter is

The terms "inventory on hand" and "inventory position" have the same meaning.

For the inventory model with planned shortages,the optimal order quantity results in

When quantity discounts are available,order an amount from the highest discount category.

Inventory models in which the rate of demand is constant are called

In the single-period inventory model with probabilistic demand,

The objective of the EOQ with quantity discounts model is to

Introduction

Introduction to Probability

Probability Distributions

Decision Analysis

Utility and Game Theory

Forecasting

Introduction to Linear Programming

Lp Sensitivity Analysis and Interpretation of Solution

Linear Programming Applications

Distribution and Network Problems

Integer Linear Programming

Advanced Optimization Application

Project Scheduling: Pertcpm

Waiting Line Models

Simulation

Markov Processes

Filters