SOLVED

21) A product whose EOQ is 400 units experiences a 50% increase in demand. The new EOQ is: A) unchanged. B) increased by less than 50%. C) increased by 50%. D) increased by more than 50%. E) cannot be determined 22) For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $600. What is the inventory carrying cost per unit per year for this item? A) $1.50 B) $2.00 C) $3.00 D) $150.00 E) not enough data to determine 23) A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup) costs. A) $400 B) $800 C) $1200 D) Zero; this is a class C item. E) Cannot be determined because the unit price is not known. 24) A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order: A) all 4000 units at one time. B) 200 units per order. C) every 20 days. D) 10 times per year. E) none of the above 25) Which of the following statements regarding the reorder point is TRUE? A) The reorder point is that quantity that triggers an action to restock an item. B) There is a reorder point even if lead time and demand during lead time are constant. C) The reorder point is larger than d × L if safety stock is present. D) A shorter lead time implies a smaller reorder point. E) All of the above are true. 26) An inventory decision rule states, “When the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered.” Which of the following statements is TRUE? A) One hundred is the reorder point, and 14 is the order quantity. B) Fourteen is the reorder point, and 100 is the order quantity. C) The number 100 is a function of demand during lead time. D) Fourteen is the safety stock, and 100 is the reorder point. E) None of the above is true. 27) Which of the following statements regarding the production order quantity model is TRUE? A) It applies only to items produced in the firm’s own production departments. B) It relaxes the assumption that all the order quantity is received at one time. C) It relaxes the assumption that the demand rate is constant. D) It minimizes the total production costs. E) It minimizes inventory. 28) Which of these statements about the production order quantity model is FALSE? A) The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. B) Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. C) Average inventory is less than one-half of the production order quantity. D) All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. E) None of the above is false. 29) The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. What is the production order quantity for this problem? A) 139 B) 174 C) 184 D) 365 E) 548 30) A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 612 units. What is the average inventory for this problem? A) 61 B) 245 C) 300 D) 306 E) 490