MS12-TB10 - 10 Inventory Models MULTIPLE CHOICE 1....

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10 Inventory Models MULTIPLE CHOICE 1. Inventory a. is held against uncertain usage so that a supply of items is available if needed. b. constitutes a small part of the cost of doing business. c. is not something that can be managed effectively. d. All of the alternatives are correct. ANSWER: a TOPIC: Introduction 2. Inventory models in which the rate of demand is constant are called a. fixed models. b. deterministic models. c. JIT models. d. requirements models. ANSWER: b TOPIC: Introduction 3. The EOQ model a. determines only how frequently to order. b. considers total cost. c. minimizes both ordering and holding costs. d. All of the alternatives are correct. ANSWER: b TOPIC: EOQ model 4. Which cost would not be considered part of a holding cost? a. cost of capital b. shipping cost c. insurance cost d. warehouse overhead ANSWER: b TOPIC: EOQ model 5. For inventory systems with constant demand and a fixed lead time, a. the reorder point = lead-time demand. b. the reorder point > lead-time demand. c. the reorder point < lead-time demand. d. the reorder point is unrelated to lead-time demand. ANSWER: a TOPIC: When-to-order decision 1
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2 Chapter 10 Inventory Models 6. Safety stock a. can be determined by the EOQ formula. b. depends on the inventory position. c. depends on the variability of demand during lead time. d. is not needed if Q* is the actual order quantity. ANSWER: c TOPIC: EOQ model 7. The economic production lot size model is appropriate when a. demand exceeds the production rate. b. there is a constant supply rate for every period, without pause. c. ordering cost is equivalent to the production setup cost. d. All of the alternatives are correct. ANSWER: c TOPIC: Economic production lot-size model 8. The maximum inventory with backorders is a. Q b. Q - S c. S d. (Q - S) / 2 ANSWER: b TOPIC: Inventory model with planned shortages 9. Annual purchase cost is included in the total cost in a. the EOQ model. b. the economic production lot size model. c. the quantity discount model. d. all inventory models. ANSWER: c TOPIC: Quantity discounts for the EOQ model 10. In the single-period inventory model with probabilistic demand, a. surplus items are not allowed to be carried in future inventory. b. c o = c u . c. probabilities are used to calculate expected losses. d. All of the alternatives are correct. ANSWER: c TOPIC: Single-period inventory model 11. For the inventory model with planned shortages, the optimal order quantity results in a. annual holding cost = annual ordering cost. b. annual holding cost = annual backordering cost. c. annual ordering cost = annual holding cost + annual backordering cost. d. annual ordering cost = annual holding cost – annual backordering cost.
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This note was uploaded on 04/21/2011 for the course ACC 01 taught by Professor El-helbawy during the Spring '11 term at Tanta University.

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MS12-TB10 - 10 Inventory Models MULTIPLE CHOICE 1....

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