1. What does WIP stand for?

a) work-in-process

b) waiting inventory position

c) warning of inventory position

d) weight of inventory position

e) waiting inventory potential

2. What are purchased items or extracted materials that will be transformed into components or products called?

a) work-in-process inventory

b) finished goods inventory

c) raw materials inventory

d) distribution inventory

e) MRO inventory

3. Hand tools, lubricants, and cleaning supplies are usually examples of what?

a) WIP inventory

b) finished goods inventory

c) raw materials inventory

d) distribution inventory

e) MRO inventory

4. Which inventory function provides a cushion against unexpected supply shortage?

a) anticipation inventory

b) fluctuation inventory

c) lot-size inventory

d) transportation inventory

e) speculative inventory

5. Which of the following is an assumption of the basic EOQ model?

a) Lead time is unknown.

b) Demand may be seasonal.

c) Orders can arrive in partial shipments.

d) Quantity discounts are not considered.

e) Lost sales are allowed, but not back orders.

6. Which of the following is an assumption of the basic EOQ model?

a) Lead time is known and constant.

b) Demand may be seasonal.

c) Orders can arrive in partial shipments.

d) Quantity discounts are considered.

e) Lost sales are allowed, but not back orders.

7. What costs are considered in the basic EOQ model?

a) annual ordering costs + annual holding costs

b) annual purchasing costs + annual holding costs

c) annual ordering costs + annual holding costs + annual shortage costs

d) annual purchasing costs + annual ordering costs + annual holding costs + annual shortage costs

e) ordering costs per order + annual holding costs

8. If annual demand is 24,000 units, orders are placed every 0.5 months, and the cost to place an order is $50, what is the annual ordering cost?

a) $50

b) $1,200,000

c) $2,400,000

d) $1,200

e) $600,000

9. For the basic EOQ model, what is the formula for the total annual cost?

a) 2DS/H

b) (D/Q)S+ (Q/2)H

c) (Q/D)S + (Q/2)H

d) DQ/S + 2Q/H

e) 2DH/S

10. For the basic EOQ model, how many units should be ordered each time that an order is placed?

a) 2DS/H

b) (D/Q)S+ (Q/2)H

c) (Q/D)S + (Q/2)H

d) DQ/S + 2Q/H

e) 2DH/S

11. If the EOQ is ordered, which of the following is true?

a) Annual ordering cost exceeds annual holding cost.

b) Annual holding cost exceeds annual ordering cost.

c) Annual ordering cost is equal to annual holding cost.

d) The sum of annual ordering cost plus annual holding cost is maximized.

e) The annual holding cost curve is decreasing.

12. What does EPQ stand for?

a) ensuring purchasing quality

b) economic production quota

c) economic production quantity

d) economic purchasing quota

e) economic purchasing quantity

13. If the costs (S and H) and demands (D) are the same, which of the following is not true with regard to the EPQ model as compared to the EOQ model?

a) The EPQ model produces a lower total annual cost.

b) The maximum inventory level is lower under the EPQ model than under the EOQ model.

c) Both models use the same formula to compute annual ordering cost.

d) The inventory depletion rate is not the same for both models.

e) The two models use different formulas to compute annual holding cost.

14. If the costs (S and H) and demands (D) are the same, which of the following is true with regard to the EPQ model as compared to the EOQ model?

a) The lot size under the EPQ model is bigger than under the EOQ model.

b) The maximum inventory level is higher under the EPQ model than under the EOQ model.

c) The two models use different formulas to compute annual ordering cost.

d) The inventory depletion rate is not the same for both models.

e) Both models use the same formula to compute annual holding cost.

15. What costs are considered in the quantity discount model?

a) annual ordering costs + annual holding costs

b) annual purchasing costs + annual holding costs + annual ordering costs

c) annual ordering costs + annual holding costs + annual shortage costs

d) annual purchasing costs + annual ordering costs + annual holding costs + annual shortage costs

e) ordering costs per order + annual holding costs

16. What are two logical ways in which to base the time between orders in a periodic review system?

a) replenishment lead time or EOQ calculations

b) replenishment lead time or bottleneck cycle time

c) convenience or replenishment lead time

d) convenience or EOQ calculations

e) convenience or bottleneck cycle time