1- Which of the following would tend to decrease the safety stock inventory?

Decrease setup cost

Decrease lead time

Improve demand forecast

Decrease order quantity

Decrease capacity cushion

2- There is a(n) _relationship between the inventory holding cost and cost of lost sales.

proportional

reverse

non-linear

negative

progressive

3- The order cycle would decrease if

the annual demand for an item increased.

the cost to place an order decreased.

the supplier charged one price regardless of the quantity ordered.

the cost of capital decreased.

the lead time decreased.

4-. Which one of the following reasons creates a pressure for reducing inventories?

need for reduction in total payments to suppliers

on-time delivery requests from customers

high cost of capital

need for better equipment utilization

none of the above creates a pressure for reducing inventories

5. In an inventory problem, the fixed ordering costs are increased but all other factors remain the same. This change will

increase the optimum order quantity

change the demand pattern

reduce the optimum order quantity

change the stockout costs

increase the optimum lead time

6- The ABC firm is using a continuous inventory quantity system and is currently ordering 300 units every time an order is placed. Their annual order costs are $200 and their annual carrying costs are $300. To minimize their total annual inventory costs the firm should

reduce the order quantity so that it is less than 300 units

increase the order quantity so that it is greater than 300 units

leave the order quantity at 300 units since it is the optimal order quantity

use a periodic inventory system to reduce costs

cannot be answered because of insufficient information