6) In inventory models, a quantity discount will lower the : 2066005
6) In inventory models, a quantity discount will lower the reorder point.
7) What will be the effect on total ordering costs (calculated over multiple orders) in an inventory system as the size of each order increases?
A) It will increase.
B) It will decrease.
C) It will remain unchanged.
D) Order size has no effect on ordering costs.
8) The materials manager for a tire manufacturer must periodically place orders for a key chemical, one of the raw materials used in producing tires. The manager knows that manufacturing uses the chemical at a rate of 300 lbs. each week, and the lead time for delivery is 4 days. Assume that the manufacturing operation runs 5 days a week. At what point should the chemical be reordered?
A) When 0 lbs. are remaining
B) When 240 lbs. are remaining
C) When 375 lbs. are remaining
D) When 1200 lbs. are remaining
9) In setting the reorder point for an item with variable demand, a service level of 95% will imply which of the following?
A) Stockouts may occur only 5 times during the phase of 100 inventory cycles.
B) 5% of the supplier shipments will be late.
C) There is a 0.05 probability that the forecasted demand is not accurate.
D) The forecast demand will be accurate 95% of the time.
10) In the Economic Order Quantity (EOQ) model, if lead time increases from five to ten days, what will be the impact on the EOQ?
A) It will double.
B) It will increase, but not double.
C) It will decrease by a factor of two.
D) It will remain unchanged.