a. labor

b. record keeping

c. rent

*d. all the above

2. Which of the following is not a cost associated with carrying inventory? *a. price discounts

b. carrying costs

c. ordering costs

d. shortage costs

3. The level of inventory at which a new order should be placed is known as the a. lead time

b. replenishment quantity

*c. reorder point

d. service level

4. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate. If the cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00, then the optimal order quantity (EOQ) for napkins would be a. 62,500 boxes

b. 10,000 boxes

*c. 5,000 boxes

d. 2,500 boxes

Calculate the EOQ, Q* =sqrt [(2*D*CO )/CC] = sqrt [(2*62500*200)/1] = 5000

5. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate. The cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00. If the restaurant orders the optimal (EOQ) number of boxes each time an order is placed, then the number of orders placed during the year would be *a. 12.5

b. 15

c. 20.25

d. 25

# of orders = D/Q* = 62500/5000 = 12.5

6. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate over the 365 days that it is open. The cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00. If the restaurant orders the optimal order size then the time between orders (order cycle) would be a. 125 days

b. 75.3 days

c. 32.8 days

*d. 29.2 days

Time between orders = # of working days/# of orders = 365/12.5 = 29.2 days

7. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate. The cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00. If the restaurant orders the...

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