Economic order quantity assumptions

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Reference no: EM132124580

1. The manager of the Quick Stop Corner convenience store (which is open 360 days per year) sells four cases of Stein soda each day (1440 cases per year). Order costs are $8.00 per order. The lead time for an order is three days. Annual holding costs are equal to $57.60 per case.

What is the reorder point for Stein soda?

A. 8 cases

B. 4 cases

C. 16 cases

D. 12 cases

2. EOQ is the optimal order quantity that will ________ total inventory costs.

A. maximize

B. maintain

C. steady

D. minimize

3. A PERT/CPM activity has an optimistic time estimate of 3 days, a most likely time estimate of 8 days, and a pessimistic time estimate of 10 days. The expected time (in days) of this activity is:

A. 7.0

B. 8.0

C. 7.5

D. 8.5

4. If the economic order quantity (EOQ) assumptions are met and a company orders the EOQ each time an order is placed, then the

A. total annual holding costs will be greater than total annual ordering cost.

B. total annual holding costs will be less than total annual ordering cost.

C. total annual holding costs will be equal to total annual ordering cost.

D. total annual holding costs may be greater than, less than, or equal to total annual ordering cost.

Reference no: EM132124580

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