in an operation process to absorb uncertainties in the 1. Inventory performs as a process. a. profit generator b. money saver c. buffer 2. Larger order quantities would result in a. higher b. lower average inventory c. no change in 3. Which is an example of the inventory "ordering cost"? a. Cost of good. b. Shipping and handling cost. c. Cost of renting the storage space. d. Both a and b. 4. Suppose Q* is the order quantity obtained from the EOQ (economical order quantity) formula. Which would make Q* smaller? a. Increased ordering cost per order. b. Decreased ordering cost per order. c. Decreased annual holding cost per unit. d. None of the above. 5. The total annual inventory cost or total annual cost of inventory (including total holding cost and ordering cost) associated with the optimal order quantity Q* is than that associated with any other order quantities. a. always greater b. always less C. sometime greater and sometime less 6. Higher safety stock would make the average inventory level a higher b. lower c. unchanged if the item's daily demand is quite uncertain. 7. The safety stock of an item tends to be a. lower b. higher 8. If average daily demand is 20 units, lead time for delivery is 3 days, and safety stock is set as 16 units, then the reorder point ROP is units. b. 60 d. 68 e. 320 f. 368 a. 20 c. 76 9. Suppose you are an inventory manager. If you do not want to see stock-out of an item, you should a. increase the level of safety stock of that item. b. decrease the level of safety stock of that item. c. increase the order quantity. d. decrease the order quantity