13. The parameters of the economic order quantity (EOQ) model include all of the

Question

13. The parameters of the economic order quantity (EOQ) model include all of the following except: A. order quantity. B. demand rate. C. holding cost per unit per year. D. ordering cost per order.

14. Company A sells 600 bottles of a dietary supplement per week at $100 per bottle. The supplement is ordered from a supplier who charges Company A $40 per order and $50 per bottle. Company A’s annual holding cost percentage is 30%. Assume Company A operates 50 weeks in a year. What is the economic order quantity? A. 200 B. 400 C. 500 D. 800

15. Store A purchases cases of fertilizer for its lawn-care business from a supplier who charges Store A $30 per order and $50 per case. Each case consists of five bags of fertilizer. Store A needs 2000 bags of fertilizer a year. Store A’s annual holding costs are 30%. If Store A’s order quantity is 40 cases, what is its average inventory level? A. 89 B. 45 C. 40 D. 20

16. A critical ratio of 0.8 means there is an 80% chance that demand is less than or equal to the optimal order quantity. True or False?

Explanation / Answer

13. In Inventory Management, Economic Order Quantity or EOQ is the order quantity the total holding costs and ordering cost.The Parameters for EOQ are thus Order Quantity, Holding Cost,Ordering Cost per order Hence Demand rate is not the criteria for EOQ.

Hence option B is correct option.

14.

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