1. C&A has an ordering cost of $10, and an annual holding cost per unit of $10. If demand is 200 units per year and C&A's current order quantity is 10 units, which of the following conclusion can be drawn?
a. C&A has the highest total inventory costs.
b. C&A's maximum inventory level is 20 units.
c. C&A's ordering cost is lower than its holding cost.
d. C&A is ordering at the EOQ level.
e. C&A is not ordering at the EOQ level.
2. C&A must decide whether to order or produce its tablet computer. Demand for the computer is 400 units per year. Holding costs per year are 5% of item cost. Ordering costs are $5 per order. C&A's production rate is 2,000 units per year. Set-up costs are $150 per production run. C&A pays a supplier $200 per computer but $198 per computer if they manufacture the computers themselves. Given the item cost information, should C&A produce or purchase the computers?
a. Produce the computers because the total holding, setup and item costs are 80133
b. Produce the computers because the total holding, ordering and item costs are 80175
c. C&A is indifferent towards the two because their costs are identical
d. Purchase the computers because the total holding, ordering and item costs are 80175
e. Purchase the computers because the total holding, ordering and item costs are 80133
3. C&A orders 2,000 sheets plywood from a supplier per year. Ordering cost is $20 per order, annual inventory holding cost is 25% of item cost, and item cost is $50 per sheet. The supplier will give a 5% discount if C&A orders 100 sheets or more. Which of the following conclusions can be drawn? Check all that apply.
a. The best order quantity is 100 sheets.
b. The economic order quantity calculated at the discounted price is not feasible.
c. The best order quantity is 80 sheets.
d. C&A should take the discount.
e. The best order quantity is 82 sheets.
4. C&A produces dog food in 20-pound bags. Monthly demand for C&A's dog food is 60,000 pounds. C&A has capacity to produce 144,000 20-pound bags per year. The setup cost to produce the dog food is $300. The holding cost is $5 per 20-pound bag per year. What is the economic production quantity?
a. 2400 bags
b. 2683 bags
c. 2078 bags
d. 4157 bags
e. 3220 bags
5. If annual demand is 50,000 units, orders are placed in quantities of 100 units at a time, and the cost to place an order is $100, what is the annual ordering cost?
a. $10,000
b. $50,000
c. $5,000
d. $1,200
e. $5,000,000