1
,Appendix III mt
1) The EOQ model is a mathematical tool for determining the order quantity that:
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A) maximizes the costs of ordering and holding inventory. mt mt mt mt mt mt mt
B) equals the costs of ordering and holding inventory.
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C) minimizes the costs of ordering and holding inventory. mt mt mt mt mt mt mt
All Chapters mt
D) has no effect on the costs of ordering and holding inventory.
mt mt mt mt mt mt mt mt mt mt
E) none of these answers are correct.
Answers Included
mt mt mt mt mt
mt
2) Inventory decisions involve a delicate balance between which of the following classes of
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t costs?
A) Ordering costs, advertising costs, and shipping costs
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B) Advertising costs, holding costs, and shortage costs mt mt mt mt mt mt
C) Ordering costs, holding costs, and shortage costs
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D) Ordering costs, shipping costs, and shortage costs
mt mt mt mt mt mt
E) Shipping costs, holding costs, and shortage costs
mt mt mt mt mt mt
3) Which one of the following is true of a just-in-time (JIT) system?
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A) JIT system uses a “pull” approach to controlling manufacturing
mt mt mt mt mt mt mt mt
B) Inventory of raw materials and parts are kept as a buffer
mt mt mt mt mt mt mt mt mt mt
C) Inventory of partially completed parts are kept as a buffer
mt mt mt mt mt mt mt mt mt
D) Finished goods are kept as a buffer mt mt mt mt mt mt
E) None of the answers are correct
mt mt mt mt mt
4) Which one of the following is true of Economic Order Quantity (EOQ)?
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A) The EOQ approach takes the view that some inventory is necessary in order to
mt mt mt mt mt mt mt mt mt mt mt mt mt
optimize the order quantity
mt mt mt mt
B) Is calculates as the square root of the following: (2 × annual requirement × cost per
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
order) ÷ annual holding cost per unit
mt mt mt mt mt mt mt
C) The graphical approach is one method of calculating EOQ
mt mt mt mt mt mt mt mt
D) A mathematical tool for determining the order quantity that minimizes the cost of
mt mt mt mt mt mt mt mt mt mt mt mt
ordering and holding inventory
mt mt mt mt
E) All of the answers are correct
mt mt mt mt mt
2
,5) Which of the following is a way that JIT efficiencies are achieved?
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A) Negotiating long-term supply agreements mt mt mt
B) Eliminating inspections mt
C) Reducing the number of vendors mt mt mt mt
D) Making less frequent payments mt mt mt
E) All of the answers are correct
mt mt mt mt mt
6) Inventory holding costs typically include:
mt mt mt mt
A) clerical costs of purchase-order preparation.
mt mt mt mt
B) costs of deterioration, theft, or spoilage.
mt mt mt mt mt
C) costs associated with lost sales to customers.
mt mt mt mt mt mt
D) forgone interest on money tied up in inventory.
mt mt mt mt mt mt mt
E) both costs of deterioration, theft, or spoilage and forgone interest on money tied up in
mt mt mt mt mt mt mt mt mt mt mt mt mt mt m
t inventory.
7) Inventory holding costs would typically include all of the following except:
mt mt mt mt mt mt mt mt mt mt
A) insurance.
B) theft.
C) transportation.
D) obsolescence.
E) warehouse rent. mt
8) Which of the following is classified as an inventory shortage cost?
mt mt mt mt mt mt mt mt mt mt
A) Purchase order preparation mt mt
B) Production disruption mt
C) Lost sales and lost customers
mt mt mt mt
D) Spoilage
E) Both production disruption and lost sales and lost customers
mt mt mt mt mt mt mt mt
9) At the economic order quantity:
mt mt mt mt
A) total annual inventory costs, holding costs, and ordering costs are all minimized.
mt mt mt mt mt mt mt mt mt mt mt
B) total annual inventory costs and holding costs are minimized.
mt mt mt mt mt mt mt mt
C) total annual inventory costs are minimized, and holding costs equal ordering costs.
mt mt mt mt mt mt mt mt mt mt mt
D) total annual inventory costs are minimized, and holding costs exceed ordering costs.
mt mt mt mt mt mt mt mt mt mt mt
E) total annual inventory costs are minimized, and ordering costs exceed holding costs.
mt mt mt mt mt mt mt mt mt mt mt
3
, 10) Langdon Enterprises uses an economic order quantity model and has determined an optimal
mt mt mt mt mt mt mt mt mt mt mt mt
mt order size of 2,200 units. Annual demand is 44,000 units, ordering costs are $60 per order,
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
mt and holding costs are $6 per unit. The company's annual holding costs total:
mt mt mt mt mt mt mt mt mt mt mt mt
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) none of the answers is correct. mt mt mt mt mt
11) Langdon Enterprises uses an economic order quantity model and has determined an optimal
mt mt mt mt mt mt mt mt mt mt mt mt
order size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, an
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
d holding costs are $4 per unit. The company's annual holding costs total:
mt mt mt mt mt mt mt mt mt mt mt mt
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) none of the answers is correct. mt mt mt mt mt
12) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt m
in 310-
t mt
sheet packages at a cost of $310 per package. Management estimates that the cost of placin
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
g and receiving a typical order is $36, and the annual cost of carrying a package in inventor
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
y is $3.60. Reflection Graphics uses 4,700 packages of paper each year. Production is const
mt mt mt mt mt mt mt mt mt mt mt mt mt mt
ant, and the lead time to receive an order is two week.
mt mt mt mt mt mt mt mt mt mt mt
The economic order quantity is approximately:
mt mt mt mt mt
Note: Round your final answer to the nearest whole number.
mt mt mt mt mt mt mt mt mt
A) 307 packages. mt
B) 4,018 packages. mt
C) 2,093 packages. mt
D) 1,636 packages. mt
E) 1,166 packages. mt
4
,Appendix III mt
1) The EOQ model is a mathematical tool for determining the order quantity that:
mt mt mt mt mt mt mt mt mt mt mt mt
A) maximizes the costs of ordering and holding inventory. mt mt mt mt mt mt mt
B) equals the costs of ordering and holding inventory.
mt mt mt mt mt mt mt
C) minimizes the costs of ordering and holding inventory. mt mt mt mt mt mt mt
All Chapters mt
D) has no effect on the costs of ordering and holding inventory.
mt mt mt mt mt mt mt mt mt mt
E) none of these answers are correct.
Answers Included
mt mt mt mt mt
mt
2) Inventory decisions involve a delicate balance between which of the following classes of
mt mt mt mt mt mt mt mt mt mt mt mt m
t costs?
A) Ordering costs, advertising costs, and shipping costs
mt mt mt mt mt mt
B) Advertising costs, holding costs, and shortage costs mt mt mt mt mt mt
C) Ordering costs, holding costs, and shortage costs
mt mt mt mt mt mt
D) Ordering costs, shipping costs, and shortage costs
mt mt mt mt mt mt
E) Shipping costs, holding costs, and shortage costs
mt mt mt mt mt mt
3) Which one of the following is true of a just-in-time (JIT) system?
mt mt mt mt mt mt mt mt mt mt mt
A) JIT system uses a “pull” approach to controlling manufacturing
mt mt mt mt mt mt mt mt
B) Inventory of raw materials and parts are kept as a buffer
mt mt mt mt mt mt mt mt mt mt
C) Inventory of partially completed parts are kept as a buffer
mt mt mt mt mt mt mt mt mt
D) Finished goods are kept as a buffer mt mt mt mt mt mt
E) None of the answers are correct
mt mt mt mt mt
4) Which one of the following is true of Economic Order Quantity (EOQ)?
mt mt mt mt mt mt mt mt mt mt mt
A) The EOQ approach takes the view that some inventory is necessary in order to
mt mt mt mt mt mt mt mt mt mt mt mt mt
optimize the order quantity
mt mt mt mt
B) Is calculates as the square root of the following: (2 × annual requirement × cost per
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
order) ÷ annual holding cost per unit
mt mt mt mt mt mt mt
C) The graphical approach is one method of calculating EOQ
mt mt mt mt mt mt mt mt
D) A mathematical tool for determining the order quantity that minimizes the cost of
mt mt mt mt mt mt mt mt mt mt mt mt
ordering and holding inventory
mt mt mt mt
E) All of the answers are correct
mt mt mt mt mt
2
,5) Which of the following is a way that JIT efficiencies are achieved?
mt mt mt mt mt mt mt mt mt mt mt
A) Negotiating long-term supply agreements mt mt mt
B) Eliminating inspections mt
C) Reducing the number of vendors mt mt mt mt
D) Making less frequent payments mt mt mt
E) All of the answers are correct
mt mt mt mt mt
6) Inventory holding costs typically include:
mt mt mt mt
A) clerical costs of purchase-order preparation.
mt mt mt mt
B) costs of deterioration, theft, or spoilage.
mt mt mt mt mt
C) costs associated with lost sales to customers.
mt mt mt mt mt mt
D) forgone interest on money tied up in inventory.
mt mt mt mt mt mt mt
E) both costs of deterioration, theft, or spoilage and forgone interest on money tied up in
mt mt mt mt mt mt mt mt mt mt mt mt mt mt m
t inventory.
7) Inventory holding costs would typically include all of the following except:
mt mt mt mt mt mt mt mt mt mt
A) insurance.
B) theft.
C) transportation.
D) obsolescence.
E) warehouse rent. mt
8) Which of the following is classified as an inventory shortage cost?
mt mt mt mt mt mt mt mt mt mt
A) Purchase order preparation mt mt
B) Production disruption mt
C) Lost sales and lost customers
mt mt mt mt
D) Spoilage
E) Both production disruption and lost sales and lost customers
mt mt mt mt mt mt mt mt
9) At the economic order quantity:
mt mt mt mt
A) total annual inventory costs, holding costs, and ordering costs are all minimized.
mt mt mt mt mt mt mt mt mt mt mt
B) total annual inventory costs and holding costs are minimized.
mt mt mt mt mt mt mt mt
C) total annual inventory costs are minimized, and holding costs equal ordering costs.
mt mt mt mt mt mt mt mt mt mt mt
D) total annual inventory costs are minimized, and holding costs exceed ordering costs.
mt mt mt mt mt mt mt mt mt mt mt
E) total annual inventory costs are minimized, and ordering costs exceed holding costs.
mt mt mt mt mt mt mt mt mt mt mt
3
, 10) Langdon Enterprises uses an economic order quantity model and has determined an optimal
mt mt mt mt mt mt mt mt mt mt mt mt
mt order size of 2,200 units. Annual demand is 44,000 units, ordering costs are $60 per order,
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
mt and holding costs are $6 per unit. The company's annual holding costs total:
mt mt mt mt mt mt mt mt mt mt mt mt
A) $13,200.
B) $14,400.
C) $485,200.
D) $265,200.
E) none of the answers is correct. mt mt mt mt mt
11) Langdon Enterprises uses an economic order quantity model and has determined an optimal
mt mt mt mt mt mt mt mt mt mt mt mt
order size of 500 units. Annual demand is 10,000 units, ordering costs are $50 per order, an
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
d holding costs are $4 per unit. The company's annual holding costs total:
mt mt mt mt mt mt mt mt mt mt mt mt
A) $2,000.
B) $3,000.
C) $21,000.
D) $41,000.
E) none of the answers is correct. mt mt mt mt mt
12) Reflection Graphics uses a special purpose paper on 80% of its jobs. The paper is purchased
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt m
in 310-
t mt
sheet packages at a cost of $310 per package. Management estimates that the cost of placin
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
g and receiving a typical order is $36, and the annual cost of carrying a package in inventor
mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt mt
y is $3.60. Reflection Graphics uses 4,700 packages of paper each year. Production is const
mt mt mt mt mt mt mt mt mt mt mt mt mt mt
ant, and the lead time to receive an order is two week.
mt mt mt mt mt mt mt mt mt mt mt
The economic order quantity is approximately:
mt mt mt mt mt
Note: Round your final answer to the nearest whole number.
mt mt mt mt mt mt mt mt mt
A) 307 packages. mt
B) 4,018 packages. mt
C) 2,093 packages. mt
D) 1,636 packages. mt
E) 1,166 packages. mt
4
