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Questions and Answers
What does the vertical axis represent in the economic order quantity graph?
What does the vertical axis represent in the economic order quantity graph?
- Reorder level
- Average inventory levels
- Holding costs (correct)
- Order quantities
Which cost increases as the average inventory level and order quantity increase in the economic order quantity graph?
Which cost increases as the average inventory level and order quantity increase in the economic order quantity graph?
- Reorder costs
- Lead time costs
- Shortage costs
- Holding costs (correct)
What is the formula to calculate the maximum level of inventory?
What is the formula to calculate the maximum level of inventory?
- Reorder level - (Average usage x Average lead time)
- Reorder level + Reorder quantity
- Reorder level - Reorder quantity
- Reorder level + Reorder quantity - (Minimum usage x Minimum lead time) (correct)
What does the EOQ formula calculate?
What does the EOQ formula calculate?
What does the maximum level of inventory act as in inventory management?
What does the maximum level of inventory act as in inventory management?
Where is the economic order quantity (EOQ) found on the economic order quantity graph?
Where is the economic order quantity (EOQ) found on the economic order quantity graph?
How is the minimum level of inventory calculated?
How is the minimum level of inventory calculated?
Which cost decreases as inventory levels and order quantities increase in the economic order quantity graph?
Which cost decreases as inventory levels and order quantities increase in the economic order quantity graph?
What is the purpose of buffer inventory in the context of inventory management?
What is the purpose of buffer inventory in the context of inventory management?
Which factor determines the buffer inventory needed in inventory management?
Which factor determines the buffer inventory needed in inventory management?
What is the purpose of maintaining inventory at the optimum level?
What is the purpose of maintaining inventory at the optimum level?
Which of the following is NOT one of the three critical control levels in inventory management?
Which of the following is NOT one of the three critical control levels in inventory management?
What does the minimum level indicate in inventory management?
What does the minimum level indicate in inventory management?
How is the reorder level calculated in inventory management?
How is the reorder level calculated in inventory management?
What does the maximum lead time represent in inventory management?
What does the maximum lead time represent in inventory management?
Why is it important to calculate inventory control levels?
Why is it important to calculate inventory control levels?
