1. The Economic Order Quantity (EOQ)

A. Balances the ordering cost with the holding cost to provide the minimum total cost.

B. Applies to the single-period inventory model.

C. Is always the “best” order quantity, even when volume discounts are offered.

D. All of the above

2. A system where the inventory position is always known, is the

A. Periodic review inventory system

B. Continuous review inventory system

C. Just-in-time inventory system

D. Single-period inventory model

E. Kanban

3. The “Inventory Position” is

A. The inventory on hand.

B. The reorder inventory.

C. The inventory on order.

D. The inventory location.

E. The inventory on hand plus the inventory on order.

4. Uncertainty in demand and/or order lead times may cause a firm to hold

A. cycle stock

B. hedge inventory

C. safety stock

D. muda

E. capital

5. In a single-period inventory model the

A. inventory is monitored continuously.

B. The cost of over-estimation of demand is balanced against the cost of under-estimation of demand.

C. A very low probability of stock-out is required.

D. The demand is deterministic.

6. Goodwill cost is

A. The cost of transporting unsold inventory to Goodwill.

B. Cost associated with unmet demand.

C. The cost (salaries, paper, transportation, etc.) associated with placing an order.

D. The cost associated with maintaining an inventory investment, including the cost of the capital investment in the inventory, insurance, taxes, warehouse overhead, etc.

7. In a periodic review system

A. The reorder point is always the same.

B. The order quantity is always the same.

C. The replenishment level is always the same.

D. Stock-out can never occur.

8. In a continuous review inventory system (with uncertain demand).

A. The reorder quantity is always the same.

B. The time between orders is always the same.

C. Unused inventory must be sold for salvage or disposed.

D. Stock-out can never occur.