Reference no: EM132618947

Problem 1: Economic order quantity is decided on the basis of:

a. Carrying cost of inventory

b. Ordering cost of inventory

c. Purchasing cost of inventory

d. a and b

e. b and c

Problem 2: Re-order level is calculated by:

a. Number of days lead time x daily usage for period

b. Maximum usage x maximum lead time

c. Minimum usage x minimum lead time

d. a and b

e. a and c

Problem 3: Minimum inventory level is calculated as follows:

a. Re-order level + EOQ - (minimum usage x maximum lead time)

b. Re-order level - (average usage x average lead time)

c. Re-order level + EOQ + (minimum usage x maximum lead time)

d. Re- order level + (average usage x average lead time)

e. Maximum usage x maximum lead time

Problem 4: Which of the following is not an assumption of the EOQ model?

a. The unit price or production cost varies with the order size

b. The ordering cost per unit is constant

c. Order quantity is constant

d. The lead time for placing and receiving an order is constant

e. The demand rate is known with certainty

Problem 5: An order should be placed when inventory reaches:

a. Minimum level

b. Maximum level

c. Re-order level

d. Danger level

e. None of the above