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