# 1. The primary purpose of the basic economic order quantity model shown below is to calculate the...

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## Question:

1. The primary purpose of the basic economic order quantity model shown below is

- to calculate the reorder point, so that replenishments take place at the proper time
- to minimize the sum of carrying cost and holding cost
- to maximize the customer service level
- to minimize the sum of setup cost and holding cost
- to calculate the optimum safety stock

2. A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order

a.all 4000 units at one time

- 200 units per order
- every 20 days
- 10 times per year
- none of the above

3. A specific product has demand during lead time of 100 units, with a standard deviation of 25 units. What safety stock (approximately) provides a 95% service level?

- 41
- 55
- 133
- 140
- 165

4. If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires a safety stock of approximately

- 28 units
- 30 units
- 49 units
- 59 units
- 114 units

**Related Book For**

## Accounting Tools for business decision making

ISBN: 978-0470095461

4th Edition

Authors: kimmel, weygandt, kieso