1. Select the correct inventory equation from the following alternatives:
   1. Beginning inventory units + number of units purchased - ending inventory units = Cost of units sold
   2. Beginning inventory units + number of units purchased - ending inventory units = Number of units sold
   3. Beginning inventory units + number of unit purchased - ending inventory units = Number of units produced
   4. Beginning inventory units - number of units purchased - ending inventory units = Cost of units sold
2. A result of a high holding cost is:
   1. Large production runs
   2. Low setup cost
   3. Low inventory level
   4. High inventory level
3. In an environment with highly seasonal demand, a benefit of level production strategy (in contrast to chase strategy) is:
   1. Smaller plant size
   2. Lower inventory holding cost
   3. Higher training costs due to frequent hiring and firing
   4. None of the above
4. Which of the following statements is True?
   1. When the learning curve is very steep, the process is learned much more slowly
   2. When there is a change in the interest rate, the ordering cost will be affected
   3. If there is a high fluctuation in the demand, then level strategy is favored
   4. When demand is lower than production, inventory increases in the level strategy
5. Which of the following statements is True?
   1. Quantity discount refer to reduction in the holding inventory cost
   2. Learning curves apply only to an individual learning a new task
   3. If overtime cost becomes higher, chase strategy becomes relatively more attractive, compared to level strategy
   4. Ice cream makers implement nearly a level strategy due to high cost of storing ice cream in freezers for many months 6. The firm should choose promotion and advertising in order to increase demand when:
      1. The capacity and the demand are nearly equal
      2. The capacity is greater than the demand
      3. The capacity is less than the demand
      4. None of the above