Chapter 7 Revision

The ________ inventory contains the basic components of the production process.

• raw materials

• work-in-process

• finished goods

• capital goods

The ________ inventory consists of all items currently in the production process.

• raw materials

• work-in-process

• finished goods

• capital goods

The ________ inventory consists of items that have been produced but not yet sold.

• raw materials

• work-in-process

• finished goods

• capital goods

The costs associated with inventory can be divided into the following groups EXCEPT

• order costs.

• marginal costs.

• carrying costs.

• total costs.

In the EOQ model, ________ costs are the variable costs per unit of holding an item of inventory for a specified time period

• basic

• order

• carrying

• processing

The economic order quantity (EOQ) is the order quantity which minimizes

• the order cost per order

• the total inventory costs.

• the carrying costs per unit per period.

• order quantity in units.

The General Chemical Company uses 150,000 gallons of hydrochloric acid per month. The cost of carrying the chemical in inventory is 50 cents per gallon per year, and the cost of ordering the chemical is $150 per order. The firm uses the chemical at a constant rate throughout the year. It takes 18 days to receive an order once it is placed. The reorder point is

• 7,500 gallons

• 25,000 gallons.

• 90,000 gallons.

• 105,000 gallons

The General Chemical Company uses 150,000 gallons of hydrochloric acid per month. The cost of carrying the chemical in inventory is 50 cents per gallon per year, and the cost of ordering the chemical is $150 per order. The firm uses the chemical at a constant rate throughout the year. The chemical's economic order quantity is

• 32,863 gallons.

• 11,619 gallons.

• 9,487 gallons.

• 1,900 gallons.

Taizhou Products uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory. Calculate the EOQ.

• 98 units

• 99 units

• 100 units

• 101 units

Taizhou Products uses 800 units of a product per year on a continuous basis. The product has carrying costs of $50 per unit per year and order costs of $300 per order. It takes 30 days to receive a shipment after an order is placed and the firm requires a safety stock of 5 days usage in inventory. Calculate the reorder point.

• 75 units

• 78 units

• 80 units

• 82 units