EOQ & Inventory Control(Quick Test)

1. The time between the placing of an order and the receipt of the goods that were ordered is known as __________ time.

2. The __________ point is the physical quantity of goods on hand when more goods should be ordered.

3. The EOQ model determines the quantity to be ordered so as to minimize the total cost of: 1) the cost of __________ and 2) the cost of holding the inventory.

4. When a customer’s order cannot be filled because an item is not in inventory, it causes a cost referred to as a __________–__________ cost.

5. The additional quantity of inventory held by a company so that it will not run out of stock when there is an unexpected increase in demand for its product is known as __________ stock.

6. If the EOQ model is used to determine a manufacturer’s economic production quantity, the cost to order is replaced by the costs related to __________ __________ a machine for a production run.

7. MRP is the acronym for materials __________planning.

8. Since the EOQ is the square root of several variables, the EOQ model is relatively insensitive to small errors in estimating those variables.

9. Some companies classify their inventory items as “A” items,”B” items, and “C” items. Which of the following is the best description of the “A” items?

10. Which of the following is the most logical calculation of a company’s inventory turnover?

11. Which of the following is a cost of holding inventory?

12. The EOQ model includes a variable to recognize the price discount granted for ordering a larger quantity.

13. The EOQ model can result in additional profit without the need for capital expenditures.

14. The costs used in the EOQ model are the incremental costs.

15. One of the amounts entered into the EOQ model is the demand__________.