Question 1

If the order quantity is 1,000 units,and the holding costs are $5 a unit per year,then ______.

Accepted Answer

The answer of If the order quantity is 1,000 units,and...

Question 2

At the optimal order quantity (EOQ),the average inventory level during the year is given by ______.

Accepted Answer

At the EOQ, the average inventory level during the year is EOQ/2, as the inventory level starts at zero, reaches maximum at EOQ/2, and then decreases to zero again by the end of the year.

Question 3

In the EPQ model,the maximum inventory level is given by ______.

Accepted Answer

The answer of In the EPQ model,the maximum inventory level...

Question 4

Given that the production run size is Q,the production rate is p,and the usage rate is d,then the inventory used up or depleted at the end of the production cycle can be calculated as ______.

Accepted Answer

The inventory used up or depleted at the end of the production cycle can be calculated as (Q/p)× d. This formula takes into account the time it takes to produce the entire lot (Q/p) and multiplies it by the rate at which the inventory is being used (d), giving the total amount of inventory depleted during the production cycle.

Question 5

According to the EPQ model,if the production run size is Q and the production rate is p,then the number days of production run is given by ______.

Accepted Answer

The EPQ model formula for number of days of production run is Q/p, so the correct choice is B. The other choices are not applicable for finding the number of days of production run in the EPQ model.

Question 6

In the calculation for the economic order quantity,______.

Accepted Answer

In the calculation for the Economic Order Quantity (EOQ), both ordering costs and holding costs are considered as approximate values. This is because it is difficult to precisely determine all the factors that influence these costs in real-world scenarios. Factors such as storage costs, insurance, and ordering costs can vary, making it challenging to pinpoint exact values.

Question 7

At the optimal order quantity (EOQ),the total annual ordering cost is given by ______.

Accepted Answer

The correct formula for total annual ordering cost at the optimal order quantity (EOQ) is given by (Annual demand / EOQ) * Ordering cost per order. This formula calculates how many times an order is placed in a year and multiplies it by the cost of placing a single order.

Question 8

According to the EPQ model,the larger the quantity produced from each production setup ______.

Accepted Answer

According to the EPQ model, the larger the quantity produced from each production setup, the fewer production runs are needed to meet demand requirements. This is because a larger quantity would last longer before running out, reducing the frequency of production setup. As a result, the total annual setup cost would be smaller as well. Therefore, option A is correct.

Question 9

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

Accepted Answer

The average inventory is calculated as half the order quantity, which in this case is 2,000 units / 2 = 1,000 units.

Question 10

Which of the following statements is FALSE if the production run size is Q,the production rate is p,and the demand or usage rate is d?

Accepted Answer

Option A is true because the number of days of production run can be calculated by dividing the total quantity produced(Q) by the production rate per day(p).
Option B is also true because inventory used up at the end of the production cycle is the total quantity produced(Q) multiplied by the demand or usage rate(d) over the production rate per day(p).
Option C is false because the correct formula for inventory used up at the end of the production cycle is (Q/p) multiplied by the demand or usage rate(d).
Option D is true because the maximum inventory is the production quantity(Q) multiplied by the difference between 1 and the demand or usage rate(d) divided by the production rate per day(p).

Question 11

Which of the following statements with regard to the economic production quantity (EPQ)model is FALSE?

Accepted Answer

The EPQ model is actually based on the Economic Order Quantity (EOQ) model, not the other way around. The EOQ model was developed first and the EPQ model was later developed as a modification of the EOQ model to allow for production setups and multiple production batches. The other statements are true: the EPQ model was developed in 1918, it assumes that the company will produce the items, and it assumes that lead time is known and constant.

Question 12

At the optimal order quantity (EOQ),the total annual inventory cost (TC)is given by ______.

Accepted Answer

The total annual inventory cost at the optimal order quantity (EOQ) is the sum of the ordering costs and holding costs. The formula for this is TC = (Annual demand/EOQ)× Ordering cost per order + (EOQ/2)× Holding cost per unit per year, which correctly balances the costs of ordering and holding inventory.

Question 13

If you have total annual cost (TAC),total annual setup cost (TASC),total annual holding cost (TAHC),and total annual materials purchase cost (TAMPC),then you can calculate total annual stock-out cost (TASOC)by this formula.

Accepted Answer

TASOC is calculated by subtracting the total annual setup cost, total annual holding cost, and total annual materials purchase cost from the total annual cost.

Question 14

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

Accepted Answer

The number of orders in a year is calculated by dividing the annual demand by the order quantity per order. Thus, with an annual demand of 10,000 units and an order quantity of 2,000 units per order, there would be 10,000 / 2,000 = 5 orders in the year.

Question 15

Average inventory is calculated as the (maximum inventory + minimum inventory)/ 2 in ______.

Accepted Answer

The average inventory calculation as (maximum inventory + minimum inventory) / 2 is used in both the Economic Order Quantity (EOQ) and Economic Production Quantity (EPQ) models to determine the average level of inventory held over a period of time.

Question 16

Which of the following statements is FALSE with regard to holding costs?

Accepted Answer

The holding cost per unit per period is not expressed as a percentage of ordering costs. It is expressed as a percentage of the purchase price.

Question 17

Given that the production run size is Q,the production rate is p,and the usage rate is d,then the inventory remaining in stock at the end of the production run is ______.

Accepted Answer

The answer of Given that the production run size is...

Question 18

Holding costs are a linear function of quantity ordered.This means that ______.

Accepted Answer

Holding costs are costs associated with holding inventory in stock, such as storage costs and obsolescence costs. These costs increase if the quantity ordered increases, as more inventory will need to be stored and potentially become obsolete. Conversely, these costs decrease as the quantity ordered decreases, as there is less inventory to store and a lower likelihood of obsolescence. Therefore, holding costs are a linear function of quantity ordered and increase as the quantity ordered increases.

Question 19

The EPQ model assumes units are received incrementally because ______.

Accepted Answer

The EPQ model, or Economic Production Quantity model, assumes units are received incrementally because it is based on the premise that items are produced in batches or lots, not all at once. This means production and receipt of units occur gradually over time as each batch is completed.

Question 20

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

Accepted Answer

To find the total annual ordering cost, we need to divide the annual demand by the order quantity per order:

10,000 / 2,000 = 5 orders per year

Then, we can multiply the number of orders per year by the cost per order:

5 x $50 = $250

Therefore, the correct statement is that the total annual ordering cost is $250.

Quiz 19: Inventory Control Models

If the order quantity is 1,000 units,and the holding costs are $5 a unit per year,then ______.

At the optimal order quantity (EOQ) ,the average inventory level during the year is given by ______.

In the EPQ model,the maximum inventory level is given by ______.

Given that the production run size is Q,the production rate is p,and the usage rate is d,then the inventory used up or depleted at the end of the production cycle can be calculated as ______.

According to the EPQ model,if the production run size is Q and the production rate is p,then the number days of production run is given by ______.

In the calculation for the economic order quantity,______.

At the optimal order quantity (EOQ) ,the total annual ordering cost is given by ______.

According to the EPQ model,the larger the quantity produced from each production setup ______.

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

Which of the following statements is FALSE if the production run size is Q,the production rate is p,and the demand or usage rate is d?

Which of the following statements with regard to the economic production quantity (EPQ) model is FALSE?

At the optimal order quantity (EOQ) ,the total annual inventory cost (TC) is given by ______.

If you have total annual cost (TAC) ,total annual setup cost (TASC) ,total annual holding cost (TAHC) ,and total annual materials purchase cost (TAMPC) ,then you can calculate total annual stock-out cost (TASOC) by this formula.

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?

Average inventory is calculated as the (maximum inventory + minimum inventory) / 2 in ______.

Which of the following statements is FALSE with regard to holding costs?

Given that the production run size is Q,the production rate is p,and the usage rate is d,then the inventory remaining in stock at the end of the production run is ______.

Holding costs are a linear function of quantity ordered.This means that ______.

The EPQ model assumes units are received incrementally because ______.

If the order quantity per order is 2,000 units,annual demand is 10,000,and cost per order is $50,then which of the following statements is true?