Question

In: Operations Management

1- Inventory costs include all of these: purchase costs, holding or carrying costs, and ordering costs....

1- Inventory costs include all of these: purchase costs, holding or carrying costs, and ordering costs.

T. True
F. False

2- The Economic Order Quantity (EOQ) model tells us........

A. how much to order
B. which are higher - holding or ordering costs
C. how to use price discounts
D. when to order


3- When tracking or counting inventory items, we should focus on which items most?
A. A-items
B. B-items
C. C-items
D. D-tems


4- The Economic Order Quantity (EOQ) model will have the lowest combination of holding and ordering costs

T. True
F. False

5- Reorder point (ROP) tells us.....

A. how much to order
B. when to order
C. how to use price discounts
D. which vendor location is best

Solutions

Expert Solution

1- Inventory costs include all of these: purchase costs, holding or carrying costs, and ordering costs.

The above statement is true because if you keep something in your inventory you would have paid for the item which will be your purchase cost, you would have ordered for it which will be ordering cost. to keep your inventory in the warehouse you will incur holding cost which is nothing but building and facility maintenance related costs.

2- The Economic Order Quantity (EOQ) model tells us........

The EOQ tells us "how much to order. " EOQ is the ideal quantity a person should purchase so as to minimize the holding & ordering cost

3- When tracking or counting inventory items, we should focus on which items most?

We should focus on "B Items " which is nothing but the items that has higher Holding or orderingcost because these items should be out of your inventory first so that you do not make any loss with such items

4. The Economic Order Quantity (EOQ) model will have the lowest combination of holding and ordering costs

The above statement is "true" this is explained in the point 1 above,

5- Reorder point (ROP) tells us.....

It tells us "when to order" because ROP can be termed as the trigger point to replenish your inventory.


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