PQT Prefinal Quiz on Inventory Mgt

ABC analysis is based upon the principle that

• all items in inventory must be monitored very closely

• there are usually a few critical items, and many items which are less critical

• an item is critical if its usage is high

  d.more time should be spent on class “C” items because there are more of them

• more time should be spent on class “C” items because there are more of them

ABC analysis divides on-hand inventory into three classes, generally based upon

• item quality

• the number of units on hand

• annual demand

• annual peso volume

The primary purpose of the basic economic order quantity model shown below is
Q* =  $\sqrt{\frac{2DS}{H}}$  

• to calculate the reorder point, so that replenishments take place at the proper time

• to minimize the sum of carrying cost and holding cost

• to maximize the customer service level

• to minimize the sum of setup cost and holding cost

A certain type of computer costs $1,000, and the annual holding cost is 25%. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity?

• 16

• 70

• 110

• 183

Most inventory models attempt to minimize

• the likelihood of a stockout

• the number of items ordered

• total inventory based costs

• the number of orders placed

In the basic EOQ model, if D=6000 per year, S=$100, H=$5 per unit per month, the economic order quantity is approximately

• 24

• 100

• 141

• 490

Thomas' Bike Shop stocks a high volume item that has a normally distributed demand during the reorder period. The annual demand is 19600 units, the lead time is 4 days. What should the reorder point be if the shop operates 300 days per year?

• 260 units

• 262 units

• 265 units

• 261 units

Given the following data: D=65,000 units per year, S = $120 per setup, P = $5 per unit, and carrying cost 25% of price per year, calculate the EOQ following EOQ behavior.

• 3500 units

• 3533 units

• 2500 units

• 2533 units

Using the formula below, Given the following data: D=65,000 units per year, S = $120 per setup, and carrying cost $1.25 per year, calculate total annual costs following EOQ or Q* of 3,533 units. $TC\ =\ \left(\frac{D}{Q\cdot}\right)S\ +\ \left(\frac{Q\cdot}{2}\right)H$  

• $4,455.88

• $4,445.88

• $4,415.88

• $4,400

Given the following data: D=65,000 units per year, S = $120 per setup, P = $5 per unit, and carrying cost 25% of price per year, calculate the expected number of orders per year following EOQ behavior.

• 15 orders

• 18 orders

• 19 orders

• 20 orders