Question

True (T) or False (F) Questions

In a queuing system, if the system’s utilization is 100%, then the customer waiting time will be zero.

In an EOQ model, if the unit inventory holding cost doubles, the optimal order quantity should be cut to half.

Assignable causes of variation are those that are frequent, random, and whose source cannot be identified.

Answer 1

In a queuing system, if the system’s utilization is 100%, then the customer waiting time will be zero.

Answer: False

Explanation: If the system utilization is 100% the waiting time would be infinite. Since the servers are used to 100% capacity the waiting time would be huge leading to customer dissatisfaction.

In an EOQ model, if the unit inventory holding cost doubles, the optimal order quantity should be cut to half.

Answer: False

Explanation: The EOQ formula is SQRT ( 2 x demand x ordering cost/holding cost). Hence if the inventory cost doubles, the optimal order quantity will not cut to half.

Assignable causes of variation are those that are frequent, random, and whose source cannot be identified.

Answer: True

Explanation: Assignable causes of variation are those which can be clearly identified. They are frequent in their occurrence, can occur randomly and their source cannot be identified.