PROBLEM 3 (MULTIPLE CHOICE) pls help me with these 1. Inventory management is the formulation and administration of plans and policies to efficiently and satisfactorilymeet production and merchandising requirements and minimize costs relative to inventories. One of its objectives1s toa. maximize the units in inventory.b. maximize sales.c. minimize production costs.d. maintain inventory at a level that best balances the estimates of actual savings, the cost of carrying additionalinventory, and the efficiency of inventory control.2. Inventory costs, in addition to the costs of the purchased items, have been traditionally classified as follows, excepta. order costs.b. carrying costs.c. stockout costs.d. order-filling costs.3. Inventory management requires the firm to balance the quantity of inventory on hand for operations with theinvestment in inventory. Two cost categories in inventory management are order costs and carrying costs.The carrying costs include handling costs, interest on capital invested, and obsolescence.b. The order costs include quantity discounts lost, handling costs, and setup costs for a production run.c. The carrying costs include purchasing costs, shipping costs, quantity discounts lost, and setup costs.d. The order costs include insurance costs, shipping costs, and obsolescence.4. In inventory management, a decrease in the frequency of ordering will normallya. increase total carrying costs.b. increase the total ordering costs.c. have no effect on total carrying costs.d. have no effect on total ordering costs.5. The EOQ model is a deterministic model that calculates the ideal order quantity (or production lot) given specifiedperiodic demand, the cost per order or production run, and the periodic carrying cost per unit. The EOQ modela. minimizes the sum of inventory carrying costs and either ordering or production setup costs.b. minimizes the sum of ordering costs and production setup costs.c. minimizes the sum of carrying costs and handling costs.d. minimizes the level of average inventory in units. 6. The Economic Order Quantity (EOQ) model can be used to establish inventory policy. In the case of a manufacturer,the EOQ is called the Economic Lot Size (ELS) or Economic Production Quantity (EPQ).Which of the following statements about the ELS is incorrect?a. The objective of the ELS model is to minimize the sum of inventory carrying costs and the costs of productionruns or setup costs.b. In the ELS model, the production rate is deemed to. be instantaneous.c. In the ELS model, the demand is assumed to occur at a constant rate over some period of time.d. The ELS model is used to maximize contribution margin or minimize costs given resource constraints.7. Which of the following is not an element in the EOQ formula?a. yearly demandb. variable cost per orderC. safety stockd. periodic carrying cost per unit8. Which of the following statements is false?a. The cost of inventory itself, as well as any quantity discounts lost on inventory purchases, is directly reflectedin the EOQ model.b. A decrease in inventory order costs will decrease the EOQ.c. An increase in inventory carrying costs will decrease the E.d. An increase in the variable cost of placing and receiving an order will increase the EOQ.9. The Economic Order Quantity (EOQ) formula does not assume thata. demand is known.b. usage is uniform.c. the cost of placing an order is constant.d. the cost of inventory itself is constant.10. In the EOQ model, the return on capital that is foregone when it is invested in inventory is a(an)a. order cost.b. carrying cost.c. exclusion in the EOQ computation.d. irrelevant cost.

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1. Inventory management is the formulation and administration of plans and policies to efficiently and satisfactorily meet production and merchandising requirements and minimize costs relative to inventories. One of its objectives is to a. maximize the units in inventory. b. maximize sales. c. minimize production costs. d. maintain inventory at a level that best balances the estimates of actual savings, the cost of carrying additional inventory, and the efficiency of inventory control. 2. Inventory costs, in addition to the costs of the purchased items, have been traditionally classified as follows, except a. order costs. b. carrying costs. c. stockout costs. d. order-filling costs. 3. Inventory management requires the firm to balance the quantity of inventory on hand for operations with the investment in inventory. Two cost categories in inventory management are order costs and carrying costs. a. The carrying costs include handling costs, interest on capital invested, and obsolescence. b. The order costs include quantity discounts lost, handling costs, and setup costs for a production run. c. The carrying costs include purchasing costs, shipping costs, quantity discounts lost, and setup costs. d. The order costs include insurance costs, shipping costs, and obsolescence.

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q