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WorksheetsACC 113_Inventory Management
Total questions: 15
Worksheet time: 24mins
The purchase-order lead time is the ____.
time between placing an order and its delivery
time between receiving a customer order and producing the products
time between receiving a customer order and delivering the items
time required to correct errors in the defective products
The optimal ordering quantity in the EOQ model occurs at the point where the sum of carrying costs and ordering costs are minimized.
TRUE
FALSE
The ideal order quantity a company should purchase for its inventory given a cost set of production, demand rate, and other variables is known as:
Reorder point
Economic Order Quantity
Under economic-order quantity decision model, it is assumed that _____.
the quantity ordered can vary at each reorder point
demand, operating costs, and carrying costs are uncertain
the purchasing cost per unit is affected by the order quantity
no inventory stockouts occur
Stockouts is synonymous with surplus.
TRUE
FALSE
More order size or quantities entails more ordering costs.
TRUE
FALSE
Which of the following formula is used to compute the annual carrying cost?
EOQ * holding cost
Average Inventory * carrying cost
Annual demand * holding cost
Annual demand * ordering cost
Annual Ordering cost is inversely related to the order quantity.
TRUE
FALSE
No relationship between the two
The point at which the firm needs to buy an inventory again. This is expressed as days of lead time multiplied by daily usage.
Reorder point
Buy back point
Lease Back Point
Repurchase amounts
At any level of inventory, the total ordering cost and and total carrying cost are always equal.
TRUE
FALSE
The carrying costs pertaining to inventory include
Insurance costs, incoming freight costs and storage costs.
Insurance costs, incoming freight costs and setup costs.
Setup costs and opportunity cost of capital invested in inventory.
Storage costs and opportunity cost of capital invested in inventory.
For the basic EOQ model, the optimal number of orders per year equals annual demand divided by the EOQ.
True
False
For the basic EOQ model, the reorder point equals daily demand times the lead-time in days.
True
False
R Corp.'s order quantity for Material T is 5,000 lbs. If the company maintains a safety stock of T at 500 lbs., and its order point is 1,500 lbs., what is the lead time assuming daily usage is 50 lbs.?
30 days
100 days
10 days
20 days
A company annually consumes 10,000 units of Part C. The carrying cost of this part is P2 per year and the ordering costs are P100. The company uses an order quantity of 500 units. By how much could the company reduce its total costs if it purchased the economic order quantity instead of 500 units?
P500
P2,000
P2,500
P0
