Question 1 Which of the following is not the reason for holding inventory? Quest

Question

Question 1

Which of the following is not the reason for holding inventory?

Question 1 options:

Improve customer service.

To protect against uncertainties in demand and lead time.

To minimize inventory holding (carrying) costs.

To act as a hedge against contingencies

Question 2

A retail store purchases computer software from a distributor for resale. For an upcoming promotion, the retailer needs to determine the best order size for a one-time purchase. One of the products is a word processing software program that will have a special sale price of $350. The program can be purchased from the distributor for $250 each. If the program has leftover inventory, the retail store can return it to the distributor and get only $100 back per copy.

What are the respective unit underage (understocking) cost and overage (overstocking) cost for the retail store?

Question 2 options:

Underage cost is $100/unit, Overage cost is $150/unit

Underage cost is $150/unit, Overage cost is $150/unit

Underage cost is $250/unit, Overage cost is $100/unit

Underage cost is $350/unit, Overage cost is $100/unit

The following information is for questions 3 to 5.

A car rental agency uses 100 boxes of staples a year. The boxes cost $4 each. It costs $10 to order staples each time, and carrying costs are 20% of the its value on an annual basis.

Question 3  

If the company orders 20 boxes each time, how many times does the company order staples in one year?

Question 3 options:

5

10

25

2

The following information is for questions 3 to 5.

A car rental agency uses 100 boxes of staples a year. The boxes cost $4 each. It costs $10 to order staples each time, and carrying costs are 20% of the its value on an annual basis.

Question 4  

What's the economic order quantity?

Question 4 options:

10

20

50

100

The following information is for questions 3 to 5.

A car rental agency uses 100 boxes of staples a year. The boxes cost $4 each. It costs $10 to order staples each time, and carrying costs are 20% of the its value on an annual basis.

Question 5

If the company orders 20 boxes each time, what is the average cycle inventory (in boxes) for the company?

Question 5 options:

5

40

20

10

Improve customer service.

To protect against uncertainties in demand and lead time.

To minimize inventory holding (carrying) costs.

To act as a hedge against contingencies

Explanation / Answer

Question:- Which of the following is not the reason for holding inventory

Answer:- To minimize inventory holding (carrying ) cost

Question:-The following information is for questions 3 to 5.

A car rental agency uses 100 boxes of staples a year. The boxes cost $4 each. It costs $10 to order staples each time, and carrying costs are 20% of the its value on an annual basis.

If the company orders 20 boxes each time, how many times does the company order staples in one year?

Answer:- Number of orders = 100/20=5

So the answer is 5

Question:-

A car rental agency uses 100 boxes of staples a year. The boxes cost $4 each. It costs $10 to order staples each time, and carrying costs are 20% of the its value on an annual basis.. What's the economic order quantity?

Answer:- EOQ = [2*100*10 /(0.2*4)]0.5 =50

Question:- If the company orders 20 boxes each time, what is the average cycle inventory (in boxes) for the company?

Answer:- 100/20=5 units

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