Question : 41) The economic-order quantity decision model A) calculates the amount of : 1186166

 

41) The economic-order quantity decision model

A) calculates the amount of inventory that may be purchased with the monetary constraint.

B) determines the minimum amount of inventory to purchase.

C) determines the maximum amount of inventory to keep on hand.

D) determines the optimal amount of inventory to order.

E) calculates the numbers of employees needed.

Answer the following question(s) using the information below:

 

Green Grass Incorporated is a distributor of golf balls. Garry’s Golf Supplies is a local retail outlet which sells golf balls. Garry’s purchases the golf balls from Green Grass Incorporated at $0.75 per ball; the golf balls are shipped in cartons of 72. Green Grass Incorporated pays all incoming freight, and Garry’s Golf Supplies does not inspect the balls due to Green Grass’ reputation for high quality. Annual demand is 172,800 golf balls at a rate of 3,322 balls per week. Garry’s Golf Supplies earns 12% on its cash investments. The purchase-order lead time is one week. The following cost data are available:

 

Relevant ordering costs per purchase order

$125.00

Carrying costs per carton per year:

 

   Relevant insurance, materials handling,

   breakage, etc., per year

$0.77

 

42) If Garry’s makes an order (1/12 of annual demand) once per month, what are the relevant total costs?

A) $1,500.00

B) $2,085.67

C) 2,225.00

D) $3,000.00

E) $680.00

 

43) What is the economic order quantity?

A) 200 cartons

B) 288 cartons

C) 300 cartons

D) 883 cartons

E) 218 cartons

44) Purchasing at the EOQ recommended level, how many deliveries will be made during each time period?

A) 2.0 deliveries

B) 6.0 deliveries

C) 8.3 deliveries

D) 12 deliveries

E) 2.7 deliveries

 

45) Purchasing at the EOQ recommended level, what are the relevant total costs?

A) $1,500.00

B) $2,085.67

C) $2,225.00

D) $3,000.00

E) $680.00

Answer the following question(s) using the information below:

 

The Wood Furniture company produces a specialty wood furniture product, and has the following information available concerning its inventory items:

 

Relevant ordering costs per purchase order

$150

Relevant carrying costs per year:

 

   Required annual return on investment

10%

   Required other costs per year

$1.40

 

Annual demand is 10,000 packages per year. The purchase price per package is $16.

 

46) What is the economic order quantity?

A) 150,000 units

B) 1,000 units

C) 75,000 units

D) 5,000 units

E) 1,464 units

 

47) What are the relevant total costs at the economic order quantity?

A) $1,000

B) $1,500

C) $3,000

D) $3,500

E) $2,050

48) What are the total relevant costs, assuming the quantity ordered equals 500 units?

A) $3,500

B) $500

C) $4,000

D) $3,750

E) $3,350

 

49) How many deliveries will be required at the economic order quantity?

A) 1.0 delivery

B) 5.1 deliveries

C) 8.2 deliveries

D) 10.0 deliveries

E) 6.8 deliveries

 

50) Wilson’s Deli can predict with virtual certainty the demand for its products. Wilson’s sells 20 hams per week. Purchase-order lead time is 2 weeks and the economic-order quantity is 50 hams. What is the reorder point?

A) 20 hams

B) 30 hams

C) 40 hams

D) 50 hams

E) 100 hams