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A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs 0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If demand is expected to be 10 million units, which plant offers the lowest total cost? -Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units Consider a firm with a 2007 net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover? ---12.5 Which of the following workers is the most productive? -- $100 wages, 21 parts produced East Texas Seasonings is preparing to build one processing center to serve its four sources of seasonings. The four source locations are at coordinates shown below. Also, the volume from each source is provided. What is the center of gravity? -- x= 28.125; y= 31.25 A restaurant runs a special promotion on lobster and plans to sell twice as many lobster as usual. When this large order is sent to the distributer the distributer assumes the large size is a trend, not a one-time event. The distributer therefore places an even larger order with the fisherman. This is the result of -location and bullwhip effect ABC analysis is based upon the principle that

there are usually a few critical items, and many items which are less critical. The graph below plots two different types of costs as a function of the order quantity in the EOQ model. Line B is a plot of the -Ordering /Setup Cost Which of the following is TRUE about the basic EOQ model? -If Q < EOQ, then the total annual Ordering Cost at Q is bigger than the total annual Ordering Cost when Q = EOQ. An inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is true? -Fourteen is the reorder point, and 100 is the order quantity. When quantity discounts are allowed, the cost-minimizing order quantity -minimizes the sum of holding, ordering, and product costs A local club is selling Christmas trees and deciding how many to stock for the month of December. If demand is normally distributed with a mean of 100 and standard deviation of 20, trees have no salvage value at the end of the month, trees cost $20, and trees sell for $50 what is the service level? --0.60

The purpose of safety stock is to -control the likelihood of a stockout due to the variability of demand during lead time The proper quantity of safety stock is typically determined by -setting the level of safety stock so that a given stockout risk is not exceeded A specific product has demand during lead time of 100 units, with a standard deviation of 25 units. What safety stock (approximately) provides a 95% service level? (The corresponding z score for 95% service level is 1.65.) -41 Which of the following items is mostly likely managed using a single-period order model? -Christmas trees

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