6. If an existing reorder point is increased, which of the following would be tr

Question

6. If an existing reorder point is increased, which of the following would be true? I. Safety stock is increased. II. The lead time on the item being ordered is increased III. Average inventory levels are decreased. a) I only b) II only c III only d) I and II e) I, II and III 7. Which of the following statements is (are) true? I. The two basic issues in inventory are how much to order and when to order. II. Using the Economic Order Quantity (EOQ) model, the higher an item's carrying costs, the more frequently it will be ordered. III. The smaller the order size, the higher the average level of inventory in the system. a) I only b) II only c) III only d) II and III e) I andI

Explanation / Answer

Reorder point means level of inventory or amount of item in the stock, the item will be order when stock falls to this level and safety stock means additional stock of a item based on fluctuations in demand, supply, prices etc.. Producer will buy this additional stock.

6. Answer is average inventory levels are decreased then only reorder point will increased

7. Answer is d

Because, EOQ is useful we can increase the orders when carrying cost is very high and the smaller size order useful to maintain the good level of the inventory

  

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