inventory management question

Answer the following multiple choice questions. No justification needed. 1. Suppose the purchase price of an item increases. However, the annual demand, the ordering/setup cost, and the percentage carrying cost remain unchanged. Then, the order quantity computed using the EOQ formula a) Increases. b) Decreases. c) Does not change. d) I need more information to answer this question. 2. Suppose the lead time for the delivery of a product increases while the service level and the distribution of the daily demand remain unchanged. Then, the (optimal) reorder point in the fixed order quantity model a) Increases. b) Decreases. c) Does not change. d) I need more information to answer this question. 3. Consider the fixed order quantity model under two scenarios: Under scenario A, the price of the product is $1. Under scenario B, the price of the product for orders under 1000 units is $1. However, the price for orders over 1000 is $0.9. Suppose under each decision, you compute the optimal order quantity and place orders of that size. Which of the following statements is correct? a) The annual setup cost under scenario A is greater than or equal to that under scenario B. b) The annual holding cost under scenario A is less than or equal to that under scenario B. c) Choices (a) and (b). d) None of the above. 4. The operations manager of Air Canada would like to decide on the number of seats to overbook. She knows that the number of no-shows follows a uniform distribution with the minimum of 0 passengers and the maximum of 9 passengers. The price of each ticket is $200. If the manager cannot accommodate a passenger, she has to return their $200 and pay them an extra $850 for thein inconvenience. How many seats should the manager overbook? a) 0 b) 1 c) 2 d) 7 e) 8 f) 9 5. Which of the following statements about the newsvendor model are incorrect? a) If the cost of understocking and overstocking are the same, the optimal order quantity is equal to the expected demand. b) Increasing the salvage value increases the optimal order quantity. c) Increasing the standard deviation of the demand increases the safety stock. d) Choices (a) and (c). e) None of the above. 6. Under which of the following conditions the critical fractile (service level) is negative? a) The salvage value is greater than the purchase price. b) The salvage value is less than the purchase price. c) The demand is normally distributed, and the z-value is negative. d) None of the above. 7. Consider the fixed order quantity model with random demand. Suppose we use the optimal order quantity and the optimal reorder point. Which of the following statements are correct? a) The expected annual holding cost is less than the expected annual ordering/setup cost. b) The expected annual holding cost is equal to the expected annual ordering/setup cost. c) The expected annual holding cost is greater than the expected annual ordering/setup cost. d) We do not have sufficient information. 8. If the lead-time for receiving the orders from the supplier doubles, the order quantity in the fixed order quantity model a. Halves. b. Doubles. c. Increase by a factor of 2. d. None of the above. 9. In the fixed order quantity model, if the standard deviation of the daily demand (d) increases (while other system parameters are kept the same), then a. The optimal order quantity increases b. The average number of orders placed every year increases c. The annual holding cost increases d. The safety stock decreases 10. Consider a newsvendor model with normally distributed demand. Suppose trfat the cost of overage is greater than the cost of underage. If the demand variance is reduced, a. The optimal order quantity increases. b. The optimal order quantity stays the same. c. The optimal order quantity decreases. d. Cannot say