Optimal economic order quantity increases

Assignment Help Operation Management

Reference no: EM131777779

1. As demand increases, the optimal economic order quantity increases at the same rate of demand. True or False?

2. A firm's ordering cost per year is independent of its order quantity decision. True or False?

3. The parameters of the economic order quantity (EOQ) model include all of the following except:

A. order quantity.

B. demand rate.

C. holding cost per unit per year.

D. ordering cost per order.

4. Company A sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges Company A $40 per order and $50 per bottle. Company A’s annual holding cost percentage is 30%. Assume Company A operates 50 weeks in a year. What is the economic order quantity?

A. 200

B. 400

C. 500

D. 800

5. Store A purchases cases of fertilizer for its lawn-care business from a supplier who charges Store A $30 per order and $50 per case. Each case consists of five bags of fertilizer. Store A needs 2000 bags of fertilizer a year. Store A’s annual holding costs are 30%. If Store A’s order quantity is 40 cases, what is its average inventory level?

A. 89

B. 45

C. 40

D. 20

6. A critical ratio of 0.8 means there is an 80% chance that demand is less than or equal to the optimal order quantity. True or False?

7. Expected profit is a direct measure of how well a company serves its customers. True or False?

8. Bakery A sells bread for $2 per loaf that costs $0.50 per loaf to make. Bakery A gives a 70% discount for its bread at the end of the day. What is the salvage value of its bread?

A. $2.00

B. $0.60

C. $0.50

D. $0.10

9. Demand is modeled with a normal distribution that has a mean of 300 and a standard deviation of 50. What is the probability that demand is 400 or less?

A. 97.7%

B. 95.4%

C. 47.7%

D. 2.3%

10. The difference between the __________ and _____________ is the mismatch costs in the newsvendor model.

A. maximum profit, expected profit

B. maximum profit, expected sales

C. minimum profit, expected profit

D. minimum profit, expected sales

Reference no: EM131777779

Questions Cloud

Outline the individuals path to working in social work field : Outline the individual's path to working in the social work field. Describe the most important contribution(s) of the individual to the field.

Calculate the profit maximizing quantity : Sam can sell all of the output he wants at a price of $1000. He has the following cost function.

Explain how manager can engage in it : Describe what transformational leadership is, and explain how manager can engage in it.

What is the opportunity cost of apples in terms of bananas : Home has 1,200 units of labour available. It can produce two goods, apples and bananas. The unit labour requirement in apple production is 3.

Optimal economic order quantity increases : As demand increases, the optimal economic order quantity increases at the same rate of demand.

Develop a strategy and creative approach : Develop a strategy and creative approach that can be taken to help both products continue to succeed during their next life cycle phase.

Methods of achieving the objective : Include the pathway necessary to accomplish this goal by identifying the objective(s), methods of achieving the objective(s), and ways to measure success.?

Manufacturers usually carry work-in-process inventory : Manufacturers usually carry work-in-process inventory. Companies belonging to the same industry segment should have the same inventory turns.

Key areas of training : "Key Areas of Training"

User Account

All Pages