Quiz 1
Q 1: “Super Pumps” imports industrial pumps to its office located in New Jersey, NY State. A
new pump manufacturer has been sourced in Portland, Oregon. Super Pump can purchase
directly from manufacturer, & transport to NY State by either truck/ship. If item is shipped by
truck, it’ll take 14 days at $3/unit. The co expects to purchase 2000 units/yr at $800/pump. In-
transit carrying cost of inv is estimated to be 20%/yr. Operations stated that they’d need to keep
safety stock of 80 units on hand if shipped by truck & 190 units if shipped by cargo. Which mode
of transp’n should the purchasing ee select & y?
Truck
Annual freight costs: 2000u * $3 = $6000
Annual in-transit HC: 2000u * $800 * .2 * (14/365) = $ 12273.97
Safety stock HC/yr: 80u * ($800 + $3) * .2 = $12848
Annual TC: $6000 + $12273.97 + $12848 = $31121.97
Ship
Annual freight costs: 2000u * $1 = $2000
Annual in-transit HC: 2000u * $800 *.2 * (35/365) = $30684.93
Safety stock HC/yr: 190u * ($800 + $1) * .2 = $30438
Annual TC: $2000 + $30684.93 + $30438 = 63122.93
Bc $31121.97 < $63122.93, choose truck.
Q 2: Value added refers to:
A. The cost of inputs.
B. The price of outputs.
C. The ≠ between cost of inputs & the value/price of outputs. ✔
D. The xtra profit obtained from ↑ed productivity.
E. The ratio of outputs compared to inputs.
Q 3: Operations mgmt encompasses all of the following EXCEPT:
A. Buying materials.
B. Capacity planning.
C. Scheduling.
D. Motivating ees & training.
E. Preparing fncial statements. ✔
Q 4: Measurements taken at various points in the transf’n process 4 control purposes r called:
A. Plans.
B. Directions.
C. Controls.
D. Feedback. ✔
E. Proposals.
Q 1: “Super Pumps” imports industrial pumps to its office located in New Jersey, NY State. A
new pump manufacturer has been sourced in Portland, Oregon. Super Pump can purchase
directly from manufacturer, & transport to NY State by either truck/ship. If item is shipped by
truck, it’ll take 14 days at $3/unit. The co expects to purchase 2000 units/yr at $800/pump. In-
transit carrying cost of inv is estimated to be 20%/yr. Operations stated that they’d need to keep
safety stock of 80 units on hand if shipped by truck & 190 units if shipped by cargo. Which mode
of transp’n should the purchasing ee select & y?
Truck
Annual freight costs: 2000u * $3 = $6000
Annual in-transit HC: 2000u * $800 * .2 * (14/365) = $ 12273.97
Safety stock HC/yr: 80u * ($800 + $3) * .2 = $12848
Annual TC: $6000 + $12273.97 + $12848 = $31121.97
Ship
Annual freight costs: 2000u * $1 = $2000
Annual in-transit HC: 2000u * $800 *.2 * (35/365) = $30684.93
Safety stock HC/yr: 190u * ($800 + $1) * .2 = $30438
Annual TC: $2000 + $30684.93 + $30438 = 63122.93
Bc $31121.97 < $63122.93, choose truck.
Q 2: Value added refers to:
A. The cost of inputs.
B. The price of outputs.
C. The ≠ between cost of inputs & the value/price of outputs. ✔
D. The xtra profit obtained from ↑ed productivity.
E. The ratio of outputs compared to inputs.
Q 3: Operations mgmt encompasses all of the following EXCEPT:
A. Buying materials.
B. Capacity planning.
C. Scheduling.
D. Motivating ees & training.
E. Preparing fncial statements. ✔
Q 4: Measurements taken at various points in the transf’n process 4 control purposes r called:
A. Plans.
B. Directions.
C. Controls.
D. Feedback. ✔
E. Proposals.
