MKTG 372 REGO FINAL QUESTIONS AND ANSWERS
2026
If the costs (S and H) and demands (D) are the same, which of the following is not true
with regard to the EPQ model as compared to the EOQ model?
A) The EPQ model produces a lower total annual cost.
B) The maximum inventory level is lower under the EPQ model than under the EOQ
model.
C) Both models use the same formula to compute annual ordering cost.
D) The inventory depletion rate is the same for both models.
E) Both models use the same formula to compute annual holding cost. - Answers -E)
Both models use the same formula to compute annual holding cost.
How can the EPQ model be economically reconciled with just-in-time (JIT) production?
A) Reduce annual demand (D).
B) Increase annual holding cost per unit (H).
C) Decrease ordering (or setup) cost (S).
D) Increase annual holding cost per unit (H) and Decrease ordering cost (S).
E) The two cannot be reconciled. - Answers -C) Decrease ordering (or setup) cost (S).
The maintenance department of a large hospital uses about 816 cases of liquid
cleanser annually.The hospital has an holding cost of $4 per case a year, an ordering
cost of $12 per order. The following price schedule applies to the purchases.
Units Ordered
1-49 50-79 80-99 100 or more
Price Per Unit $20.00 $18.00 $17.00 $16.00
What is the optimal order quantity?
A) 50
B) 70
C) 80
D) 100
E) none of the above - Answers -D) 100
Recall the graph of the inventory cost functions. In general, as the order size increases
A) ordering costs decrease and carrying costs increase.
B) ordering costs increase and carrying costs decrease.
C) both ordering and carrying costs increase.
D) both ordering and carrying costs decrease. - Answers -A) ordering costs decrease
and carrying costs increase
Louisiana Specialty Foods can produce its famous meat pies at a rate of 1650 cases of
48 pies each per day. The firm distributes the pies to regional stores and restaurants at
, a steady rate of 250 cases per day. The cost of setup in transition from other products
to pies is $320. Annual holding costs are $11.50 per case. Assume 250 days per year.
The optimum production run (batch size) is approximately
A) 48 cases
B) 179 cases
C) 1048 cases
D) 2025 cases
E) none of the above - Answers -D) 2025 cases
Louisiana Specialty Foods can produce its famous meat pies at a rate of 1650 cases of
48 pies each per day. The firm distributes the pies to regional stores and restaurants at
a steady rate of 250 cases per day. The cost of setup in transition from other products
to pies is $320. Annual holding costs are $11.50 per case. Assume 250 days per year.
The number of production runs per year is approximately
A) 28
B) 31
C) 42
D) 53
E) none of the above - Answers -B) 31
Louisiana Specialty Foods can produce its famous meat pies at a rate of 1650 cases of
48 pies each per day. The firm distributes the pies to regional stores and restaurants at
a steady rate of 250 cases per day. The cost of setup in transition from other products
to pies is $320. Annual holding costs are $11.50 per case. Assume 250 days per year.
The maximum inventory is approximately
A) 1718 cases
B) 1774 cases
C) 1849 cases
D) 1872 cases
E) none of the above - Answers -A) 1718 cases
Louisiana Specialty Foods can produce its famous meat pies at a rate of 1650 cases of
48 pies each per day. The firm distributes the pies to regional stores and restaurants at
a steady rate of 250 cases per day. The cost of setup in transition from other products
to pies is $320. Annual holding costs are $11.50 per case. Assume 250 days per year.
The total inventory (setup and carrying) costs per year (rounded to the nearest dollar) is
A) 15,732
B) 18,794
C) 19,756
D) 21,436
E) none of the above - Answers -C) 19,756
Under a periodic review system, enough inventory must be carried to protect against
stockout for the:
A) replenishment lead time
B) review period
2026
If the costs (S and H) and demands (D) are the same, which of the following is not true
with regard to the EPQ model as compared to the EOQ model?
A) The EPQ model produces a lower total annual cost.
B) The maximum inventory level is lower under the EPQ model than under the EOQ
model.
C) Both models use the same formula to compute annual ordering cost.
D) The inventory depletion rate is the same for both models.
E) Both models use the same formula to compute annual holding cost. - Answers -E)
Both models use the same formula to compute annual holding cost.
How can the EPQ model be economically reconciled with just-in-time (JIT) production?
A) Reduce annual demand (D).
B) Increase annual holding cost per unit (H).
C) Decrease ordering (or setup) cost (S).
D) Increase annual holding cost per unit (H) and Decrease ordering cost (S).
E) The two cannot be reconciled. - Answers -C) Decrease ordering (or setup) cost (S).
The maintenance department of a large hospital uses about 816 cases of liquid
cleanser annually.The hospital has an holding cost of $4 per case a year, an ordering
cost of $12 per order. The following price schedule applies to the purchases.
Units Ordered
1-49 50-79 80-99 100 or more
Price Per Unit $20.00 $18.00 $17.00 $16.00
What is the optimal order quantity?
A) 50
B) 70
C) 80
D) 100
E) none of the above - Answers -D) 100
Recall the graph of the inventory cost functions. In general, as the order size increases
A) ordering costs decrease and carrying costs increase.
B) ordering costs increase and carrying costs decrease.
C) both ordering and carrying costs increase.
D) both ordering and carrying costs decrease. - Answers -A) ordering costs decrease
and carrying costs increase
Louisiana Specialty Foods can produce its famous meat pies at a rate of 1650 cases of
48 pies each per day. The firm distributes the pies to regional stores and restaurants at
, a steady rate of 250 cases per day. The cost of setup in transition from other products
to pies is $320. Annual holding costs are $11.50 per case. Assume 250 days per year.
The optimum production run (batch size) is approximately
A) 48 cases
B) 179 cases
C) 1048 cases
D) 2025 cases
E) none of the above - Answers -D) 2025 cases
Louisiana Specialty Foods can produce its famous meat pies at a rate of 1650 cases of
48 pies each per day. The firm distributes the pies to regional stores and restaurants at
a steady rate of 250 cases per day. The cost of setup in transition from other products
to pies is $320. Annual holding costs are $11.50 per case. Assume 250 days per year.
The number of production runs per year is approximately
A) 28
B) 31
C) 42
D) 53
E) none of the above - Answers -B) 31
Louisiana Specialty Foods can produce its famous meat pies at a rate of 1650 cases of
48 pies each per day. The firm distributes the pies to regional stores and restaurants at
a steady rate of 250 cases per day. The cost of setup in transition from other products
to pies is $320. Annual holding costs are $11.50 per case. Assume 250 days per year.
The maximum inventory is approximately
A) 1718 cases
B) 1774 cases
C) 1849 cases
D) 1872 cases
E) none of the above - Answers -A) 1718 cases
Louisiana Specialty Foods can produce its famous meat pies at a rate of 1650 cases of
48 pies each per day. The firm distributes the pies to regional stores and restaurants at
a steady rate of 250 cases per day. The cost of setup in transition from other products
to pies is $320. Annual holding costs are $11.50 per case. Assume 250 days per year.
The total inventory (setup and carrying) costs per year (rounded to the nearest dollar) is
A) 15,732
B) 18,794
C) 19,756
D) 21,436
E) none of the above - Answers -C) 19,756
Under a periodic review system, enough inventory must be carried to protect against
stockout for the:
A) replenishment lead time
B) review period
