Question

1- Inventory costs include all of these: purchase costs, holding or carrying costs, and ordering costs.

T. True

F. False

2- The Economic Order Quantity (EOQ) model tells us........

A. how much to order

B. which are higher - holding or ordering costs

C. how to use price discounts

D. when to order

3- When tracking or counting inventory items, we should focus on which items most?

A. A-items

B. B-items

C. C-items

D. D-tems

4- The Economic Order Quantity (EOQ) model will have the lowest combination of holding and ordering costs

T. True

F. False

5- Reorder point (ROP) tells us.....

A. how much to order

B. when to order

C. how to use price discounts

D. which vendor location is best

Answer 1

1. True

The inventory costs possess ordering cost, holding cost, purchase cost and cost of transportation as well.

2. A. How much to order

The order quantity that will minimize total holding and ordering cost.

3. A. A-items

They are the most important items that needs to be considered in the process.

4. True

5. B. When to order

The optimum time to order in order to avoid over stocking and out if stock situations.