POM session 3 18042022

Economic Order Quantity (EOQ) is the order quantity that _______

• minimizes annual ordering costs

• minimizes annual holding costs

• minimizes annual inventory costs by equalizing ordering and holding costs

• minimizes the required safety stock

Economic Order Quantity (EOQ) establishes

• The maximum number of items to purchase at one time

• The amount of items to order each time to minimize overall inventory costs

• The number of items to order in bulk to receive a discount

• The amount of items to order each time to maximize ordering costs

In POQ, if production rate (P) = consumption rate (D), the inventory amount that accumulates during 1 production run is:

• P

• D/Q

• Q/D

• 0

Which of the following statements is a true statement about the Newsvendor model?

• The ordering decision is made before the customer demand is known.

• It can be only applied to vendors who sell newspapers or magazines.

• It can be used only if unsold units cannot be salvaged.

• The order decision-maker always knows the exact future quantity of demand

The two most basic inventory questions answered by the typical inventory model are:

• Timing and cost of orders

• Quantity and cost of orders

• Timing and quantity of orders

• Order quantity and service level

Q is to ____ systems as P is to ____ systems

• Fixed quantity, fixed period

• Variable demand, constant demand

• Variable lead time, variable demand

• None of the above is accurate

Most inventory models are made based on:

• Profit maximization

• Cost minimization

• Optimum influence on demand

• Minimizing setup times

The EOQ (or optimal Q) refers to the order quantity for which:

• 6 sigma should be applied

• The annual holding costs and the annual ordering are the same

• The annual ordering is minimal

• The average backorders level is the same as the average inventory level

The margin lost by a firm for each lost sale because there is no inventory on hand is

• The cost of overstocking the product

• The cost of understocking the product

• The cost of stocking the product

• The cost of overselling the product