The two most basic inventory questions answered by the typical inventory model are: A) timing of orders and cost of orders. B) order quantity and cost of orders. C) timing of orders and order quantity.

D) order quantity and service level. E) ordering cost and carrying cost.

Which of the following is NOT an assumption of the economic order quantity model shown below? Q* =

A) Demand is known, constant, and independent. B) Lead time is known and constant. C) Quantity discounts are not possible. D) Production and use can occur simultaneously. E) The only variable costs are setup cost and holding (or carrying) cost.

What is the primary purpose of the basic economic order quantity model shown below? Q* =

A) to calculate the reorder point, so that replenishments take place at the proper time B) to minimize the sum of carrying cost and holding cost C) to maximize the customer service level D) to minimize the sum of setup cost and holding cost

E) to calculate the optimum safety stock

If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand:

Q* =

A) is smaller than the holding cost per unit. B) is zero. C) is one-half of the economic order quantity. D) is affected by the amount of product cost. E) goes down if the holding cost per unit goes down.