OPM530 CHAPTER 10

Which of the following would NOT generally be a motive for a firm to hold inventories?

• to decouple various parts of the production process

• to take advantage of quantity discounts

• to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand

• to minimize holding costs

Which of these would be considered as a work-in-process inventory for a bread factory?

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• 
• 
• 

Which of these would be considered as a finished good inventory for a bread factory?

• 
• 
• 
• 

In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will __________

• increase by about 41%

• increase by 100%

• increase by 200%

• increase, but more data is needed to say by how much

A product whose EOQ is 400 units experiences a 50% increase in demand. The new EOQ is __________ .

• unchanged

• increased by less than 50%

• increased by 50%

• increased by more than 50%

If the ordering cost is $4, the annual demand is 250 units, and the holding cost is $0.20 per unit per year; what is the number of orders (N)?

• 1.5

• 2

• 2.5

• 3.5

In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $60 per unit per year, what is the economic order quantity?

• 24

• 100

• 141

• 490

A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order. The revised EOQ is:

• three times as large.

• one-third as large.

• nine times as large.

• one-ninth as large.

For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $600. What is the inventory carrying cost per unit per year for this item?

• $1.50

• $2.00

• $3.00

• $150.00

Ibumerekahijau Inc sells a certain type of ergonomically correct office chair that costs $300. The annual holding cost rate is 40% of the item cost, annual demand is 900 units, and the ordering cost is $20 per order. The lead time is 4 days, and the company operates 300 days per year. What is the reorder point?

• 12

• 4

• 1200

• 3