Inventory

Among different types of costs associated with inventory, the opportunity cost of the investment tied up in inventory is a(n) ________.

• purchasing cost 
• ordering cost
• stockout cost
• carrying cost

Under  economic-order-quantity decision model, it is assumed that ________.

• the quantity ordered can vary at each reorder point 
• demand, ordering costs, and carrying costs are uncertain
• the purchasing cost per unit is affected by the order quantity
• no inventory stockouts occur

Which of the following costs is a relevant inventory stockout cost under EOQ decision model?

• The costs of obsolescence and costs of insurance that change with the quantity of inventory held.
• The return forgone by investing capital in inventory rather than elsewhere.
• The lost contribution margin on sales forgone as a result of customer dissatisfaction due to unavailability of goods.
• The costs of storage space owned that cannot be used for other profitable purposes when inventories decrease.

What is the primary purpose of the economic order quantity (EOQ) model?

• To minimize the total cost of inventory management.

• To maximize the quantity of inventory held.

• To determine the best time to reorder inventory.

• To eliminate all stockout costs.

In the context of inventory management, which of the following is considered a carrying cost?

• The cost of purchasing raw materials.

• The cost of storing inventory in a warehouse.

• The cost incurred from stockouts.

• The cost of ordering supplies from suppliers.

Sharp Inc., a company that markets sterile syringes to various hospitals, aims to reduce its inventory costs by determining the optimal order quantity for syringes. The annual demand for syringes is 5,000 units, with an ordering cost of Rp 1,500 per order and a holding cost of Rp 0.5 per unit per year. Each syringe is priced at Rp 100, and the company maintains a safety stock of 750 units to ensure availability. The lead time for delivery is 7 days. Based on this information, how much is the total inventory cost to optimize its operations?