Essay on Brs Mdm3 Tif Ch12

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Managerial Decision Modeling w/ Spreadsheets, 3e (Balakrishnan/Render/Stair) Chapter 12 Inventory Control Models 12.1 Chapter Questions Use this information to answer the following questions. A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ordering costs are estimated at $5 per order. Assume that the bakery is open 250 days a year and its daily demand is estimated at 20 bags. It takes 5 days for each order of sugar to be filled. 1) Refer to the information above. What is the optimal EOQ? A) 200 bags B) 5000 bags C) 2500 bags D) 100 bags E) 50 bags Answer: E Page Ref: 12-7 Topic: Economic Order Quantity: Determining How Much to Order Difficulty:…show more content…
A) insurance B) spoilage C) obsolescence D) theft E) inspection Answer: E Page Ref: 12-4 Topic: Inventory Control Decisions Difficulty: Moderate 15) The Z-value for a desired service level of 0.95 is ________. A) 1.28 B) 1.65 C) 1.96 D) 2.33 E) 2.58 Answer: B Page Ref: 12-25 Topic: Use of Safety Stock Difficulty: Moderate AACSB: Analytic Skills 16) If the standard deviation of demand is 10 and the desired service level is 0.90, then what is the safety stock? A) 9 B) 10 C) 12.8 D) 16.5 E) 23.3 Answer: C Page Ref: 12-25 Topic: Use of Safety Stock Difficulty: Moderate AACSB: Analytic Skills 17) Processing and inspecting incoming inventory are considered ordering cost factors. Answer: TRUE Page Ref: 12-4 Topic: Inventory Control Decisions Difficulty: Moderate 18) The optimal Economic Order Quantity (EOQ) minimizes the sum of ordering and purchasing costs. Answer: FALSE Page Ref: 12-5 Topic: Economic Order Quantity: Determining How Much to Order Difficulty: Moderate 19) Spoilage is considered to be a part of carrying cost. Answer: TRUE Page Ref: 12-4 Topic: Inventory Control Decisions Difficulty: Moderate 20) The Economic Order Quantity (EOQ) formula assumes that all input data are known with

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