The capacity of a system is determined by

1. Utilization
2. How smart the management is
3. Stock price
4. Bottleneck
5. The degree of training employees receive

Which of the following assumptions is TRUE about the EOQ calculation?

1. Steady demand
2. Demand can be unmet
3. There is no fixed cost for order placement
4. It allows stock-out and there is a penalty cost for it
5. All above answers are TRUE about the EOQ model

Assuming a replenishment system for a product that has varying demand, a reduction in order lead time will affect all of the following EXCEPT

1. The order quantity
2. The amount of safety stock
3. The reorder point
4. The total annual inventory cost

If ordering cost increased by a factor of four, the EOQ would:

1. Increase by a factor of four
2. Decrease by a factor of four
3. Increase by a factor two
4. Decrease by a factor two
5. None of the above

Safety stock exists for which of the following reasons?

1. To allow less expensive purchases by buying more at a discounted rate
2. To allow for transportation time
3. To provide protection against the uncertainties of supply and demand
4. All of the above
5. None of the above

A sommelier at a fine restaurant keeps a cellar of wine with an average of 800 bottles of wine at any time. The restaurant sells 25 bottles of wine on average any given day. What is the average number of days a wine bottle is held in the cellar?

1. 10 days
2. 20 days
3. 32 days
4. 50 days