Brs Mdm3 Tif Ch12: Inventory Control Models

Satisfactory Essays
Managerial Decision Modeling w/ Spreadsheets, 3e (Balakrishnan/Render/Stair)
Chapter 12 Inventory Control Models

12.1 Chapter Questions

Use this information to answer the following questions.

A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled.

1) Refer to the information above. What is the optimal EOQ?
A) 200 bags
B) 5000 bags
C) 2500 bags
D) 100 bags
E) 50 bags
Answer: E
Page Ref: 12-7
Topic: Economic Order Quantity: Determining How Much to Order
Difficulty: Moderate
AACSB: Analytic Skills

2) Refer to the information above. What is the maximum inventory held in a given EOQ cycle?
A) 5000 bags
B) 200 bags
C) 50
D) 100 bags
E) 15 bags
Answer: C
Page Ref: 12-6
Topic: Economic Order Quantity: Determining How Much to Order
Difficulty: Moderate
AACSB: Analytic Skills

3) Refer to the information above. What is the minimum inventory held in a given EOQ cycle?
A) 0 bags
B) 2500 bags
C) 50 bags
D) 25 bags
E) 100 bags
Answer: A
Page Ref: 12-6
Topic: Economic Order Quantity: Determining How Much to Order
Difficulty: Moderate
AACSB: Analytic Skills
4) Refer to the information above. What is the total cost of ordering and carrying sugar?
A) $50
B) $100
C) $25
D) $1000
E) $500
Answer: D
Page Ref: 12-6
Topic: Economic Order Quantity: Determining How Much to Order
Difficulty: Moderate
AACSB: Analytic Skills

5) Refer to the information above. What is the optimal number of orders per year?
A) 200
B) 100
C) 500
D) 300
E) 400
Answer: B
Page Ref: 12-6
Topic: Economic Order Quantity: Determining How Much to Order
Difficulty: Moderate
AACSB: Analytic Skills

6) Refer to the information above. What is the average inventory held in a given cycle?
A) 0
B) 50
C) 25
D) 100
E) 75
Answer: C
Page

You May Also Find These Documents Helpful

  • Satisfactory Essays

    63. In a two-bin inventory system, the amount contained in the second bin is equal to the: 
A. ROP
B. EOQ
C. amount in the first bin
D. optimum stocking level
E. safety stock…

    • 6798 Words
    • 28 Pages
    Satisfactory Essays
  • Satisfactory Essays

    SCM 366 HW1

    • 517 Words
    • 1 Page

    a. Suppose your friend orders 2,500 gallons of malt each time an order is made. What is the total annual holding and ordering costs using this order quantity?…

    • 517 Words
    • 1 Page
    Satisfactory Essays
  • Good Essays

    Web Search 2

    • 739 Words
    • 3 Pages

    5. If a company has beginning inventory of $30,000 and ending inventory of $55,000, compute its average inventory. If the cost of goods sold is $140,000, compute its inventory turnover and determine how many days the average item is in stock. The average inventory would be 42,500, and average…

    • 739 Words
    • 3 Pages
    Good Essays
  • Powerful Essays

    Hw Accounting

    • 737 Words
    • 3 Pages

    6-43. Which of the following factors would suggest the use of a periodic inventory system?…

    • 737 Words
    • 3 Pages
    Powerful Essays
  • Good Essays

    Comm 399 Mt Review

    • 2071 Words
    • 9 Pages

    Mid-Term Review Problems Part I (Introduction + Process Analysis + Inventory Build-Up + OM Triangle)…

    • 2071 Words
    • 9 Pages
    Good Essays
  • Satisfactory Essays

    ACC 422 Final Exam

    • 1420 Words
    • 7 Pages

    A physical inventory on March 31, 2012, shows 2,032 units on hand. Prepare schedules to compute the ending inventory at March 31, 2012, under each of the following inventory methods. Assume Esplanade Company uses the periodic inventory method.…

    • 1420 Words
    • 7 Pages
    Satisfactory Essays
  • Good Essays

    Operations Managements

    • 2532 Words
    • 11 Pages

    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?…

    • 2532 Words
    • 11 Pages
    Good Essays
  • Good Essays

    QAT 3

    • 553 Words
    • 3 Pages

    The Economic Order Quantity Model will allow an organization to determine the optimal volume of inventory to order at a given time. The EOQ model provides the most optimized approach to inventory ordering as it considers, demand, ordering cost, and holding costs; to develop the volume of inventory to be ordered to maintain to minimum annual cost (Render, 2012).…

    • 553 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Module 5 Problems Mrnak

    • 742 Words
    • 2 Pages

    4.) What is the impact of lead time, and lead time variability, on inventory levels?…

    • 742 Words
    • 2 Pages
    Good Essays
  • Satisfactory Essays

    Questions McLeod Motors

    • 329 Words
    • 2 Pages

    g) How large must the inventory be? (Or, how small could it be?) What is the…

    • 329 Words
    • 2 Pages
    Satisfactory Essays
  • Satisfactory Essays

    Xacc/280 Week 3 Quiz

    • 826 Words
    • 4 Pages

    6. _____ Effie Company uses a periodic inventory system. Details for the inventory account for the month of January, 2014 are as follows:…

    • 826 Words
    • 4 Pages
    Satisfactory Essays
  • Good Essays

    MgtOp 340 Final Exam Notes

    • 5984 Words
    • 33 Pages

    You are the supplier of Hula-Hoops to Wal-Mart, and they are your only consumer. Wal-Mart uses its EOQ to determine that they should buy 2000 units from you each time they order. Given this information which of the following could not be an optimal order quantity for your company?…

    • 5984 Words
    • 33 Pages
    Good Essays
  • Powerful Essays

    Accountant 492

    • 1210 Words
    • 5 Pages

    5. Physical inventory is taken on a cycle count basis. Reason: This introduces errors in the inventory count.…

    • 1210 Words
    • 5 Pages
    Powerful Essays
  • Good Essays

    Final Exam Study Guide

    • 1559 Words
    • 7 Pages

    (b) The owner would like to ensure no stock-outs in 95% of the cycles (i.e., the service level is 95%). The safety stock the store should have is (in quarts):…

    • 1559 Words
    • 7 Pages
    Good Essays
  • Powerful Essays

    Khalideoq

    • 815 Words
    • 4 Pages

    While the EOQ method determines the level of inventory that must be ordered in order to minimize the cost of ordering and cost…

    • 815 Words
    • 4 Pages
    Powerful Essays