Question 31) For the single-period model, if margi

31) For the single-period model, if marginal loss increases relative to marginal profit, then the optimal order quantity will increase.

32) Inventory

A) is any stored resource used to satisfy current or future need.

B) includes raw materials, work-in-process, and finished goods.

C) levels for finished goods are a direct function of demand.

D) needs from raw materials through finished goods can be reasonably determined, once finished goods demand is determined.

E) All of the above

33) Which of the following is not a use of inventory?

A) the decoupling function

B) quantity discounts

C) irregular supply and demand

D) the translucent function

E) to avoid stockouts and shortages

34) In making inventory decisions, the purpose of the basic EOQ model is to

A) minimize carrying costs.

B) minimize ordering costs.

C) minimize the sum of carrying costs and ordering costs.

D) minimize customer dissatisfaction.

E) minimize stock on hand.

35) Which of the following is not considered a significant inventory cost?

A) cost of production labor

B) purchase cost

C) cost of stockouts

D) cost of carrying an item

E) cost of ordering

36) Which of the following is part of the determination of EOQ?

A) cost of production labor

B) cost of stockouts

C) purchase cost

D) annual demand

E) total revenue

37) Which of the following factors is (are) not included in ordering cost?

A) bill paying

B) obsolescence

C) purchasing department overhead costs

D) inspecting incoming inventory

E) developing and sending purchase orders

38) Which of the following factors is (are) not included in carrying cost?

A) spoilage

B) obsolescence

C) cost of capital

D) inspecting incoming inventory

E) warehousing overhead costs

39) Mark Achin sells 3,600 electric motors each year. The cost of these is $200 each, and demand is constant throughout the year. The cost of placing an order is $40, while the holding cost is $20 per unit per year. There are 360 working days per year and the lead-time is 5 days. If Mark orders 200 units each time he places an order, what would his total ordering cost be for the year?

A) $2,000

B) $2,720

C) $200

D) $720

E) None of the above

Skills

40) The annual demand for a product has been projected at 2,000 units. This demand is assumed to be constant throughout the year. The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost. The purchase cost is $40 per unit. There are 250 working days per year. Currently, the company is ordering 500 units each time an order is placed. Assuming the company uses a safety stock of 20 units resulting in a reorder point of 60 units, what is the expected lead-time for delivery?

A) 4 days

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