INTRO TO INVENTORY & CLASSIC INVENTORY MODELS- Old Exam Questions

INTRO TO INVENTORY & CLASSIC INVENTORY MODELS- Old Exam Questions

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INTRO TO INVENTORY & CLASSIC INVENTORY MODELS OLD EXAM QUESTIONS (The answer key is at the end of this document.) The Mighty Quick Stop convenience store is open 365 days a year. Mighty Quick Stop sells 25 bottles of Burp Cola each day. It costs $8.00 for Mighty Quick Stop to order Burp Cola, regardless of the size of the order. The Burp Cola Distributor sells Burp Cola to Mighty Quick Stop for $0.15 a bottle, and the Distributor delivers Burp Cola exactly three days after Mighty Quick Stop places an order. If Mighty Quick Stop were to hold one bottle of Burp Cola in inventory for one year (Burp Cola never spoils!), it would cost Mighty Quick Stop 5 times (or 500% of) the bottle’s cost. Please answer the following three questions, based on this information. 1. What order size will minimize Mighty Quick Stop’s Burp Cola costs? a) 23 bottles b) 171 bottles c) 441 bottles d) 987 bottles e) 9125 bottles 2. Using the order size that will minimize Mighty Quick Stop’s Burp Cola costs, how many bottles, on average, will be in inventory? a) 20.7 bottles b) 21.5 bottles c) 171 bottles d) 220.5 bottles e) 441 bottles
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