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.) The answer is TRUE. Inventory cost include purchase, holding and ordering costs

2.) The EOQ tells us A) how much to order, i.e. it tells us the order size which minimizes total holding and ordering cost

3.) We should focus more on A) A - items as they have the highest percentage of total inventory value. Thus, tracking them will benefit the most.

4.) The answer is TRUE, EOQ model gives the lowest combination of holding and ordering costs.

5.) ROP tells us B) When to order, it is the inventory level, reaching which, an order must be placed under ROP model.

keosha answered 2 years ago
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