Question : 21) The simplest version of the economic-order-quantity decision model assumes : 1186164

 

21) The simplest version of the economic-order-quantity decision model assumes all of the following EXCEPT

A) the same fixed quantity is ordered at each reorder point.

B) demand ordering costs and carrying costs are certain.

C) purchase order lead time is certain.

D) no stockouts occur.

E) purchasing costs per unit depend on the quantity ordered.

 

22) The purchase-order lead time is

A) the difference between the time an order is placed and delivered.

B) the difference between the products ordered and the products received.

C) the discrepancies in purchase orders.

D) the time required to correct errors in the products received.

E) the discrepancies in inventory sheets.

 

 

Use the information below to answer the following question(s).

 

Movie Time is a distributor of DVDs. Video Mart is a local retail outlet which sells blank and recorded DVDs. Video Mart purchases DVDs from Movie Time at $5.00 each; the units are shipped in packages of 25. Movie Time pays all incoming freight, and Video Mart does not inspect the DVDs due to Movie Time’s reputation for high quality. Annual demand is 104,000 DVDs at a rate of 2,000 units per week. Video Mart earns 15% on its cash investments. The purchase-order lead time is one week. The following cost data are available:

 

Relevant ordering costs per purchase order

$94.50

Carrying costs per package per year:

Relevant insurance, materials handling, breakage, etc., per year

$3.50

 

23) What is the economic-order quantity?

A) 874 packages

B) 652 packages

C) 200 packages

D) 198 packages

E) 188 packages

 

24) What are the total relevant inventory costs?

A) $6,150.50

B) $4,182.56

C) $2.560.20

D) $1,951.70

E) $2,462.41

25) How many deliveries will be made during each time period?

A) 22.1 deliveries

B) 26.0 deliveries

C) 29.4 deliveries

D) 32.0 deliveries

E) 29.6 deliveries

 

Use the information below to answer the following question(s).

 

Office Supply House purchases 4,160 reams of paper per year, ordered in lots of 80 reams per week at $150 per ream. The vendor covers all shipping costs. Office Supply House is not required to inspect the shipment upon entry. Office Supply House earns 20% on its cash investments. The purchase-order lead time is two weeks. The following cost data are available:

 

Relevant ordering costs per purchase order

$53.75

Relevant insurance, materials handling, breakage, and so on, per year

$4.25

 

26) What is the economic-order quantity?

A) 324 reams

B) 235 reams

C) 114 reams

D) 100 reams

E) 110 reams

 

27) What are the total relevant inventory costs at the economic-order quantity?

A) $3,913.65

B) $3,948.50

C) $4,975.86

D) $6,238.62

E) $4,862.84

28) What are the total relevant costs assuming the quantity ordered equals 80 reams?

A) $3,913.65

B) $3,948.50

C) $4,075.25

D) $4,165.00

E) $5,326.49

 

29) How many deliveries will be required at the economic-order quantity level?

A) 17.7 deliveries

B) 36.5 deliveries

C) 41.6 deliveries

D) 52.3 deliveries

E) 18.9 deliveries

 

30) The level of inventory which should trigger a new order is called

A) the customer demand level.

B) the supply equal demand level.

C) the stockout level.

D) the reorder point.

E) the inventory level.