Reference no: EM132250571

For each answer, indicate ‘T’ for TRUE or ‘F’ for FALSE.

a) T or F: The longer the lead time for replenishment of inventory, the larger the order size must be. _____

b) T or F: Automating the ordering process so as to reduce the fixed administrative costs for placing orders should result in a reduction in cycle inventory (assuming the proper application of EOQ concepts). ______

c) T or F: The Economic Order Quantity (EOQ) model is used to resolve the trade-off between annual holding costs and annual ordering costs. _______

d) T or F: Assuming that demand and lead time do not change, an increase in the ROP (reorder point) will result in an increase in the number of annual inventory turns. ______

e) T or F:   The role of safety stock is to allow a firm to take advantage of economies of scale for fixed costs (such as ordering and/or transportation costs) _______

f)  Doubling the lead time (e.g. from five to ten days) would mean that the average demand during the lead time increases by 2.000 times while the standard deviation of demand during the lead time increases by 1.414 times. _______