Question 1.1.

(TCO 8) Which of the following is not a role of inventory?

Increasing quality of finished goods

Balancing supply and demand

Buffering uncertainty in supply or demand

Enabling geographical specialization

Question 2.2.

Suppose demand is 45 units a month, average inventory is 60 units, and unit cost is $20.

What is the annual inventory turnover?

10

9

0.75

15

Question 3.3.

If beginning inventory is $1,000,000, ending inventory is $1,400,000, sales are $10,000,000, and anticipated sales are

$50,000 per day, what is the number of days of supply?

28 days

70 days

60 days

32 days

Question 4.4.

Jones Manufacturing Inc. purchases a component from a Chilean supplier. The demand for that component is exactly 70 units each day. The company is open for business 250 days each year.

When the company reorders the product, the lead time from the supplier is exactly 10 days.

The product costs $14.00. The company determined that its inventory carrying cost is 20%. The company's order cost is $30.00.

If the company decides to order 1,750 units each time it places an order, what will be the total annual cost of this policy? (Do not include the product cost in your answer.)

$1,500

$2,400

$2,750

$3,400

Question 5.5.

Jones Company has calculated that the EOQ for a particular item is 1,000 units.

However, Jones does not have enough capital to order that many units each time, so it only orders 250 units at a time.

This will result in higher annual inventory carrying cost than ordering the EOQ quantity.

lower annual inventory carrying cost than ordering the EOQ quantity.

lower annual ordering cost than ordering the EOQ quantity.

This cannot be determined.

Question 6.6.

A company has average demand of 30 units per day. Lead time from the supplier averages 7 days.

Assume that the combined standard deviation of demand during lead time has been calculated and is equal to 20 units.

One unit costs $10 and the inventory carrying cost is 25%.

What is the reorder point for the company if it decides on a 99% service level?

243 units

257 units

77 units

210 units