SECTION A ...15 marks Instruction: Highlight the correct answer 1. For the basic Economic Order Quantity (EOQ). which of the following assumptions is TR '? A. The demand is known exactly and is constant over time. B. The lead time of the inventory is never zero. C. All costs are known but they may vary. D. Planned shortages are allowed 2. To make inventory decisions, the purpose of the basic EOQ model is to minimize: A. customer dissatisfaction B. carrying costs C. ordering costs D. the sum of carrying costs and ordering costs . Renewables Auto Dealer sells 3600 electric motors each year. The cost of these are $200 each and demand is constant throughout the year. The cost of placing an order is $40. while the holding cost is $20 per unit per year. There are 360 working days per year and the lead-time is 5 days. If Renewables order size is 200 units. what would the total ordering cost be for the year? A. $200 B. $720 C. $2000 D. $2720 4. All the following are holding cost EXQEPT: A. obsolescence cost B. overheads C. handling D. depreciation . In inventory control. the time which elapse between placing an order and the arrival of the inventory is called A. cycle time B. lead time C. mean time D. variance time . The basic difference(s) between the simple EOQ model and the production run model is the: A. holding cost per unit per year and the ordering cost per order B. difference in the inventory delivery assumption C. difference in the assumption about demand D. difference in the assumptions concerning stock-out and shortages 7. The purpose of the economic reorder point is to tell you: A. how much to order B. when to order C. when your stock is at a certain level D. the value of the inventory left 8. A product has a 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. every 20 days B. 10 times per year C. 200 units per order D. all 4000 units at once 9'. Which of the following is N_0T a benet obtained from the proper planning and control of inventory? A. Preventing irregular supply and demand B. Using up storing resources C. Allowing stock-outs and shortages D. Making use of quantity discounts 10. In the basic EOQ model. the demand is 1000 units, the EOQ is 500 units and the number of working days is 250. The cycle time is: A. 2 B. 4 C. 125 D. 250 11. Which of these is w in the setup cost calculations? A. economic ordering cost B. Annual ordering cost C. annual demand D. cost per order 12. Which of the following is M an assumption of the EOQ model? A. Ordering cost is xed B. Annual demand is known C. The order is received the instant it is made D. The stock is used up in a random manner 13. If the daily demand of a company is 50 and they have a lead time in days of 4, what is their reorder point? A. 200 B. 220 C. 240 D. 260 14. Which of the following is an example of order cost? A. insurance B. refrigeration C. rent D. transportation 15. Which of the following is m an assumption of the BBQ model? A. Inventory is replenished instantaneously B. Ordering cost is constant C. The stock is used up gradually D. The annual demand is known