The following statements refer to the Economic OrderQuantity (EOQ) model. Which of the following are true?I. The EOQ is found by minimizing the total demandfunction.II. Total annual purchasing costs affects the EOQ.III. The EOQ model takes the timing of reordering intoaccount.

Introduction: The Economic Order Quantity (EOQ) model is a widely used inventory management…

Answered: The following stateme Quantity (EOQ)…

Principles Of Marketing

17th Edition

ISBN:9780134492513

Author:Kotler, Philip, Armstrong, Gary (gary M.)

Publisher:Kotler, Philip, Armstrong, Gary (gary M.)

Chapter1: Marketing: Creating Customer Value And Engagement

Section: Chapter Questions

Problem 1.1DQ

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CU Incorporated (CUI), produces copper contacts that it uses in switches and relays. CUI needs to determine the order quantity, Q, to meet the annual demand at the lowest cost. The price of copper depends on the quantity ordered. Here are price break and other data for the problem. Price copper $ .81 per pound up to 2,499 pounds .80 2,500-4,999 pounds .78 5,000 pound or greater Annual demand 51,000 pounds per year Holding cost 30 % per unit/yr. Of the price of copper Ordering cost $ 30 Which quantity should be ordered?
Which of the following is an assumption of the EOQ model? A. The demand for the material may vary from time to time. B. All of the quantity ordered arrives in full just as the company runs out of inventory C. The item cost and the shortage costs are known and constant. D. The lead time could be different from one order to another.
Which of the following is NOT an assumption of the EOQ model?a. It is possible to receive a purchase discount if the order quantity is sufficiently large.b. There is a fixed cost to submit each order that is independent of the amount ordered.c. Demand occurs at a constant rate per unit of time.d. There is a cost to hold each unit of inventory per unit of time
The Fed increases the interest rate suddenly, leading to a sharp and immediate increase in loan interest rates. How will the EOQ behave in the immediate/short run? Assume all other variables stay relatively unchanged in the immediate term. EOQ = Sq root of [(2D*S)/H] D = annual demand in units S = cost of placing 1 order; H = cost of holding 1 unit of that item in inventory for 1 year EOQ will not be affected EOQ will increase EOQ will decrease
In the classic Economic Order Quantity (EOQ) associated with inventory under the assumptions of constant demand and fixed costs, what happens if the annual demand increases from 1000 units to 2000 units? The EOQ increases and the reorder point increases. The EOQ decreases and the reorder point decreases. The EOQ increases and the reorder point remains the same. The EOQ decreases and the reorder point increases.
The basic EOQ model is based on all the following assumptions except: A. Annual demand is known and constant.B. The item is always available when needed.C. Estimates of ordering and carrying costs are accurate.D. Order is instantaneously received exactly when previous inventory has just been used up.
The basic EOQ model is based on all the following assumptions except: * A. Annual demand is known and constant.B. The item is always available when needed.C.Estimates of ordering and carrying costs are accurate.D.Order is instantaneously received exactly when previous inventory has just been used up.
Consider a product with a daily demand of 500 units, a setup cost per production run of $100, a daily holding cost per unit of $0.20, and an annual production rate of 219,000 units. The firm operates and experiences demand 365 days per year. Suppose that management mistakenly used the basic EOQ model to calculate the batch size instead of using the production order quantity model. How much money per year has that mistake cost the company?
The basic EOQ model is based on all the following assumptions except: * Estimates of ordering and carrying costs are accurate. Order is instantaneously received exactly when previous inventory has just been used up. Annual demand is known and constant. The item is always available when needed.
A company stocks an item that is consumed at the rate of 30 units each day. Every time an order is placed for new supply, $ 120 must be paid. A unit inventory held in stock for one week will cost $ 0.14. What is the total annual cost if the order quantity is 200 more than EOQ? What is the optimum number of orders (rounded to the closest integer) that the company has to place each year? Assume that the company has a standing policy of not allowing shortages in demand.
Which of the following statements is true: (T, S) policies require more safety stock than (s, Q) policies to achieve the same CSL. An (s, Q) policy where both demand and lead-time are stochastic requires more safety stock than an (s, Q) policy where only the demand is stochastic. For an (s, Q) policy, the reorder level is always larger than the safety stock. All of the above.
Consider the basic EOQ model (no uncertainty). Annual holding cost (???AHC) is $2,400. Find annual ordering cost (???AOC). Group of answer choices Cannot be answered because there is missing information AOC=$2,400, since AHC=AOC at the economic order quantity AOC=$0, since there is no uncertainty $1,200, since AOC=AHC/2 at economic order quantity. $4,800, since AOC=2 x AHC at economic order quantity

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The following stateme Quantity (EOQ) model. Which of the following are true? I. The EOQ is found by minimizing the total demand function. II. Total annual purchasing costs affects the EOQ. III. The EOQ model takes the timing of reordering into