Consider a firm with a daily demand of 100 units, a production rate per day of 500 units, a setup cost of $200, and an annual holding cost per unit of $10. Suppose that the firm operates 300 days per year. How many units of inventory must their storage area be able to hold? -------------------------------------------------

Answer

| | close to 975|

| | close to 980|

| | close to 1095|

| | close to 1224|

| | close to 1225|

5 points

Question 2

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If annual demand is 24,000 units, orders are placed every 0.5 months, and the cost to place an order is $50, what is the annual ordering cost? -------------------------------------------------

Answer

| | 50|

| | 600|

| | 1200|

| | 2400|

| | Can not be determined|

5 points

Question 3

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If the Economic Order Quantity (EOQ) is ordered, which of the following is true? -------------------------------------------------

Answer

| | Annual ordering cost exceeds annual holding cost.|

| | Annual holding cost exceeds annual ordering cost.|

| | Annual ordering cost is equal to annual holding cost.| | | The sum of annual ordering cost plus annual holding cost is maximized.| | | The annual holding cost curve is decreasing.|

5 points

Question 4

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The basic Economic Order Quantity (EOQ) model can be considered a special case of the Economic Production Quantity (EPQ) model under which of the following condition? -------------------------------------------------

Answer

| | The demand per day is greater than production per day.| | | The production rate per day approaches 0.|

| | The production rate per day approaches infinity.|

| | The back order cost approaches infinity.|

| | d/p = 1, where d is the demand per day and p Is the production per day.| 5 points

Question 5

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If the Economic Order Quantity (EOQ) model is used to order material, which of the following represents the total annual cost of ordering and holding? Please note the following symbols. D: Annual Demand, S: Ordering Cost/Order and H: Inventory holding cost per unit per year. -------------------------------------------------

Answer

| | |

| | |

| | |

| | |

| | |

5 points

Question 6

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A.K. Plywood Products offers the following all-units quantity discount schedule for its 4 feet by 8 feet sheets of quality plywood. Order Size| Price|

1-9 sheets| $25|

10-49 sheets| $23|

50-99 sheets| $21|

100 sheets or more| $18|

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Miami Home Furnishings (MHF) orders plywood from A.K. Plywood Products. MHF's accounting department determines an ordering cost of $50 per order and an annual inventory holding cost percentage of 20% of the price of the item. The annual demand is 250 sheets. What should the order size be every time that an order is placed to minimize total annual cost? -------------------------------------------------

Answer

| | 250|

| | 10|

| | 50|

| | 100|

| | 77|

5 points

Question 7

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A company is using the Economic Order Quantity (EOQ) model to manage its inventories. Suppose its inventory holding cost per unit per year doubles while the annual demand and the ordering cost per order do not change....