Considered as inventory-related cost

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Reference no: EM132302027

1. Which of the following is not considered as an inventory-related cost?

A) Physical cost paid to hold the inventory, like rent, energy cost.

B) Profit loss due to stock out

C) Fixed cost associated with replenishing inventory, like shipping cost.

D) Opportunity cost

E) None of the above

2. Higher days of supply means _________ inventory. Higher inventory turns means ______ inventory.

A) more, more

B) more, less

C) less, more

D) less, less

3. Which of the following is NOT an assumption of the EOQ model?

A) It is possible to receive a purchase discount if the order quantity is sufficiently large.

B) There is a fixed cost to submit each order that is independent of the amount ordered.

C) Demand occurs at a constant rate per unit of time

D) There is a cost to hold each unit of inventory per unit of time.

4. A firm evaluates its EOQ quantity to equal 180 cases but it chooses an order quantity of 150 cases. Relative to the order quantity of 180 cases, the order quantity of 150 cases will lead to

A) Higher (fixed) ordering cost and higher holding cost

B) Higher (fixed) ordering cost and lower holding cost

C) Lower (fixed) ordering cost and higher holding cost

D) Lower (fixed) ordering cost and lower holding cost

5. Which of the following does NOT have an impact on the newsvendor quantity?

A) The selling price of the product

B) The salvage value of the leftover inventory

C) The demand standard deviation

D) The mean demand volume

E) None of the above

6. A newsvendor orders the quantity that maximizes expected profit for two products, A and B. These two products have the same critical ratio. The demand forecast for both products is 9,000 units and both are normally distributed. Product A has more uncertain demand in the sense that it has the larger standard deviation. Of which of the two products does the newsvendor order more?

A) Product A, because it has less certain demand.

B) Product B, because it has more certain demand.

C) The order quantities are the same because they have the same critical ratio

D) Cannot determine. More information is needed.

Reference no: EM132302027

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