# Operating Management

2093 words 9 pages
1. Carrying costs include the following items, except:
a. labor
b. record keeping
c. rent
*d. all the above

2. Which of the following is not a cost associated with carrying inventory?
*a. price discounts
b. carrying costs
c. ordering costs
d. shortage costs

3. The level of inventory at which a new order should be placed is known as the
b. replenishment quantity
*c. reorder point
d. service level

4. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate. If the cost to order napkins is \$200.00 per order and the annual carrying cost for one box of napkins is \$1.00, then the optimal order quantity (EOQ) for napkins would be
a. 62,500 boxes
b. 10,000 boxes

Demand for the four quarters = 30,000; 40,000; 50,000 and 40,000 units respectively
Cost of production / unit = \$2
Cost of carrying / unit / quarter = \$1
Production capacity = 1000 units/quarter/employee
Beginning workforce at the start of the year = 10
Cost of hiring a worker = \$200
Cost of laying off a worker = \$400

How many workers are hired in the 2nd quarter if a level plan is followed? a. 0 workers b. 40 workers c. 10 workers d. 30 workers

17. Assume the following regarding a Sales and Operations plan.
Demand for the four quarters = 30,000; 40,000; 50,000 and 40,000 units respectively
Cost of production / unit = \$2
Cost of carrying / unit / quarter = \$1
Production capacity = 1000 units/quarter/employee
Beginning workforce at the start of the year = 10
Cost of hiring a worker = \$200
Cost of laying off a worker = \$400

What is the total cost of carrying inventory throughout the year if the level plan was followed? a. \$20,000 b. \$10,000 c. \$30,000 d. \$40,000

18. What is the total cost if a level strategy is followed? *a. \$346,000 b. \$328,000 c. \$416,000 d. none of the above

19. what is the total cost if a chase strategy is followed?
a. \$346,000 *b. \$328,000 c. \$416,000 d. none of the above

20. If the average demand consumption for an item is 20 units per day with a standard deviation of 3 units, what is the safety stock for this item with a 95% service

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