17 x11 FinMan E

# 17 x11 FinMan E - FinancialManagement(E.QuantitativeMethods...

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Financial Management (E. Quantitative Methods) E. QUANTITATIVE METHODS THEORIES: Economic Order Quantity 1. The economic order quantity is the order quantity that results in A. the minimum total annual inventory costs. B. no inventory shortages. C. the maximum total annual inventory costs. D. minimum ordering costs. Sensitivity analysis 2. Missile Company has correctly computed its economic order quantity as 500 units. However, management feels it would rather order quantities of 600 units. How should Missile’s total annual purchase-order costs and total annual carrying cost for an order quantity of 600 units compare to the respective amounts for an order quantity of 500 units? A. Higher purchase-order cost and lower carrying cost. B. Higher purchase-order cost and higher carrying cost. C. Lower purchase-order cost and higher carrying cost. D. Lower purchase-order cost and lower carrying cost. 3. A decrease in inventory order costs will A. Increase the reorder point. B. Decrease the economic order quantity. C. Have no effect on the economic order quantity. D. Decrease the holding cost percentage. 4. An increase in inventory holding costs will A. Decrease the economic order quantity. B. Have no effect on the economic order quantity. C. Increase the economic order quantity. D. Decrease the number of orders issued per year. PERT-CPM 5. Which one of the following statements best describes a difference between basic PERT and the Critical Path Method (CPM) of network analysis? A. PERT uses probability distribution on the activity times while CPM uses point estimates for the activity times. B. PERT does not allow for slack times on the activities while CPM does. C. PERT considers only activity cost while CPM considers only activity time. D. PERT determines the least-cost path through a network while CPM determines the least-time path through a network. 6. Critical Path Method (CPM) is a technique for analyzing, planning, and scheduling large, complex projects by determining the critical path from a single time estimate for each event in a project. The critical path: A. Is the shortest path from the first event to the last event for a project. B. Is an activity within the path that requires the most number of time. C. Has completion that reflects the earliest time to complete the project. D. Is the maximum amount of time an activity may be delayed without delaying the total project beyond its target completion time. Queuing Theory 7. A company is designing a new regional distribution warehouse. To minimize delays in loading and unloading trucks, an adequate number of loading docks must be built. The most relevant technique to assist in determining the proper number docks is A. Cost-volume-profit analysis C. Linear programming B. PERT/CPM analysis D. Queuing theory Linear Programming Use the following information to answer question Nos. 8 and 9: The Kinis Company produces a cosmetic product in 60 gallon batches. The basic ingredients used are material X, costing P70 per gallon, and material Y, costing P170 per gallon.

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## This note was uploaded on 11/22/2010 for the course CAC BSA taught by Professor Kairus during the Spring '10 term at Korea University.

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17 x11 FinMan E - FinancialManagement(E.QuantitativeMethods...

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