Posted: November 28th, 2015

Statistics Assignment

1. The annual demand for a product has been projected at 2,000 units. This demand is assumed to be constant throughout the year. The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost. Currently, the purchase cost is $40 per unit. There are 250 working days per year. Whenever an order is placed, it is known that the entire order will arrive on a truck in 6 days. How many units should the company order each time an order is placed if the company wishes to minimize total inventory cost?

A) 100

B) 200

C) 250

D) 500

E) None of the above

2. The annual demand for a product has been projected at 2,000 units. This demand is assumed to be constant throughout the year. The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost. Currently, the purchase cost is $40 per unit. There are 250 working days per year. Whenever an order is placed, it is known that the entire order will arrive on a truck in 6 days. Currently, the company is ordering 500 units each time an order is placed. What is the total holding cost for the year using this policy?

A) $400

B) $2,000

C) $4,000

D) $8,000

E) None of the above

3. Mark Achin sells 3,600 electric motors each year. The cost of these is $200 each, and demand is constant throughout the year. The cost of placing an order is $40, while the holding cost is $20 per unit per year. There are 360 working days per year and the lead-time is 5 days. If Mark orders 200 units each time he places an order, what would his total ordering cost be for the year?

A) $2,000

B) $2,720

C) $200

D) $720

E) None of the above

4. Rolf Steps is the production manager for a local manufacturing firm. This company produces staplers and other items. The holding cost is $2 per unit per year. The cost of setting up the production line for this is $25. There are 200 working days per year. The production rate for this product is 80 per day. If the production order quantity is 200 units, what was the daily demand (rounded to the nearest whole unit)?

A) 6 units

B) 7 units

C) 8 units

D) 9 units

E) None of the above

5. R. C. Barker makes purchasing decisions for his company. One product that he buys costs $50 per unit when the order quantity is less than 500. When the quantity ordered is 500 or more, the price per unit drops to $48. The ordering cost is $30 per order and the annual demand is 7,500 units. The holding cost is 10 percent of the purchase cost. How many units should R. C. order to minimize his total annual inventory cost? (Round your answer to the nearest unit.)

A) 300

B) 306

C) 500

D) 200

E) None of the above

6. Judith Thompson is the manager of the student center cafeteria. She is introducing pizza as a menu item. The pizza is ordered frozen from a local pizza establishment and baked at the cafeteria. Judith anticipates a weekly demand of 10 pizzas. The cafeteria is open 45 weeks a year, 5 days a week. The ordering cost is $15 and the holding cost is $0.40 per pizza per year. What is the optimal number of pizzas Judith should order?

A) 184 pizzas

B) 9 pizzas

C) 5 pizzas

D) 28 pizzas

E) None of the above

7. The annual demand for a product has been projected at 2,000 units. This demand is assumed to be constant throughout the year. The ordering cost is $20 per order, and the holding cost is 20 percent of the purchase cost. Currently, the purchase cost is $40 per unit. There are 250 working days per year. Whenever an order is placed, it is known that the entire order will arrive on a truck in 6 days. Currently, the company is ordering 500 units each time an order is placed. What should be the reorder point (excluding any safety stock) under the current policy?

A) 48

B) 100

C) 6

D) 24

E) None of the above

8. Which of the following factors is (are) not included in ordering cost?

A) bill paying

B) obsolescence

C) purchasing department overhead costs

D) inspecting incoming inventory

E) developing and sending purchase order

9. Daniel Trumpe has computed the EOQ for a product he sells to be 400 units. However, due to recent events he has a cash flow problem. Therefore, he orders only 100 units each time he places an order. Which of the following is true for this situation?

A) Annual ordering cost will be lower than annual holding cost.

B) Annual ordering cost will be higher than annual holding cost.

C) Annual ordering cost will equal annual holding cost.

D) Annual ordering cost will be unaffected by the order policy change.

E) Nothing can be determined without more information.

10. Which of the following factors is (are) not included in carrying cost?

A) spoilage

B) obsolescence

C) cost of capital

D) inspecting incoming inventory

E) warehousing overhead costs

11. An increase in holding cost will increase the economic order quantity, holding all other factors constant.

True

False

12. An increase in ordering cost will increase the economic order quantity, holding all other factors constant.

True

False

13. The two fundamental decisions that you have to make when controlling inventory are: (1) how much to order, and (2) how much money to spend.

True

False

14. The purpose of the EOQ model is to achieve a balance between the cost of holding inventory and the cost of stock outs.

True

False

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