### Continuous-review-periodic-review inventory control models

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1. Which of the following statements is INCORRECT regarding the level curves of the same objective function?

Level curves can only be used to represent objective values that are non-negative integers.

Level curves of the same objective function are always parallel to each other.

Level curves shift away from the origin point as the objective value they represent increases.

Level curves must be straight lines on a graph for LP models.

2. A firm makes two products, X and Y. Each unit of X costs \$10 and sells for \$50. Each unit of Y costs \$5 and sells for \$20. If the firm's goal is to maximize the total profit, which of the following is the CORRECT objective function?

Maximize \$40X = \$15Y

Maximize \$40X + \$15Y

Maximize \$50X + \$20Y

Maximize \$15X + \$40Y

3. Which of the following statements is INCORRECT regarding the continuous-review and periodic-review inventory control models?

It takes time to deliver an order in both models.

Demand is assumed uncertain in both models.

Orders are placed when the inventory position drops to zero in a periodic-review model.

There is no re-order point in the periodic-review model.

4. An inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is TRUE?

100 is the reorder point, and 14 is the order quantity.

14 is the reorder point, and 100 is the order quantity.

The number 100 is a function of demand during lead time

14 is the safety stock, and 100 is the reorder point.

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