IMM 10 EXAM QUESTIONS WITH
REVISED ANSWERS ALL
CORRECT
While working a simple EOQ problem, you notice that, with a certain lot size, the annual
ordering cost is exactly the same value as the annual inventory carrying cost. Which of
the following is true?
A) Total cost is at its maximum.
B) The lot size is the economic order quantity.
C) The annual carrying cost will decrease if the order quantity is increased.
D) all of the above
E) none of the above; the phenomenon is merely a coincidence - Answer- B) The lot
size is the economic order quantity.
A firm uses $20,000 of an item per year. The carrying cost is 25%, the cost of ordering
is $10
and the order quantity is $1,000. The annual total cost of carrying plus ordering would
be:
A) $500.
B) $5,000.
C) $816.
D) $2,500.
E) none of the above - Answer- C) $816.
For a particular item the usage is 2000 units per year, the ordering cost is $10, the
inventory carrying cost is 20% and the unit cost is $5. The economic order quantity is:
A) 4000 units.
B) 400 units.
C) 200 units.
D) 2000 units.
E) 20 units - Answer- C) 200 units.
If the economic order quantity is to be calculated in DOLLARS, then:
A) carrying costs are stated in dollars per unit.
B) the annual demand must be stated in dollars.
C) ordering costs MUST be stated on a per UNIT basis.
D) All of the above are true.
E) None of the above is true. - Answer- B) the annual demand must be stated in dollars.
, A supplier offers a quantity discount. Which of the following will influence the decision to
accept the discount or not?
A) cost of placing one order
B) purchase cost
C) cost of carrying inventory
D) All of the above are relevant.
E) None of the above is relevant. - Answer- D) All of the above are relevant.
If a purchase discount is taken:
I. there is a saving in purchase cost.
II. ordering costs are reduced.
III. carrying costs are increased.
IV. there is not necessarily a net saving.
A) I, II, II, and IV are true.
B) Only II and IV are true.
C) Only III and IV are true.
D) Only II and III are true.
E) Only II, III and IV are true. - Answer- A) I, II, II, and IV are true.
For a certain group of items, the cost of carrying inventory and the cost of placing orders
is not
exactly known but is about the same for all the items. The company has calculated K =
20 for these items. If one item has an annual demand (A) = $10,000 the NEW order
quantity should
be:
13)
A) $2,000.
B) $10,000.
C) $50,000.
D) $20,000.
E) none of the above - Answer- A) $2,000.
The EOQ for an item is 5500 units and the annual demand is 78,000 units. What is the
period
order quantity?
A) 14.18
B) 3.67
C) 0.27
D) 4
E) cannot be determined from the given data - Answer- B) 3.67
Which of the following statements is true?
I. The EOQ should be used with lumpy demand.
II. Transportation cost should be included in the cost of ordering.
REVISED ANSWERS ALL
CORRECT
While working a simple EOQ problem, you notice that, with a certain lot size, the annual
ordering cost is exactly the same value as the annual inventory carrying cost. Which of
the following is true?
A) Total cost is at its maximum.
B) The lot size is the economic order quantity.
C) The annual carrying cost will decrease if the order quantity is increased.
D) all of the above
E) none of the above; the phenomenon is merely a coincidence - Answer- B) The lot
size is the economic order quantity.
A firm uses $20,000 of an item per year. The carrying cost is 25%, the cost of ordering
is $10
and the order quantity is $1,000. The annual total cost of carrying plus ordering would
be:
A) $500.
B) $5,000.
C) $816.
D) $2,500.
E) none of the above - Answer- C) $816.
For a particular item the usage is 2000 units per year, the ordering cost is $10, the
inventory carrying cost is 20% and the unit cost is $5. The economic order quantity is:
A) 4000 units.
B) 400 units.
C) 200 units.
D) 2000 units.
E) 20 units - Answer- C) 200 units.
If the economic order quantity is to be calculated in DOLLARS, then:
A) carrying costs are stated in dollars per unit.
B) the annual demand must be stated in dollars.
C) ordering costs MUST be stated on a per UNIT basis.
D) All of the above are true.
E) None of the above is true. - Answer- B) the annual demand must be stated in dollars.
, A supplier offers a quantity discount. Which of the following will influence the decision to
accept the discount or not?
A) cost of placing one order
B) purchase cost
C) cost of carrying inventory
D) All of the above are relevant.
E) None of the above is relevant. - Answer- D) All of the above are relevant.
If a purchase discount is taken:
I. there is a saving in purchase cost.
II. ordering costs are reduced.
III. carrying costs are increased.
IV. there is not necessarily a net saving.
A) I, II, II, and IV are true.
B) Only II and IV are true.
C) Only III and IV are true.
D) Only II and III are true.
E) Only II, III and IV are true. - Answer- A) I, II, II, and IV are true.
For a certain group of items, the cost of carrying inventory and the cost of placing orders
is not
exactly known but is about the same for all the items. The company has calculated K =
20 for these items. If one item has an annual demand (A) = $10,000 the NEW order
quantity should
be:
13)
A) $2,000.
B) $10,000.
C) $50,000.
D) $20,000.
E) none of the above - Answer- A) $2,000.
The EOQ for an item is 5500 units and the annual demand is 78,000 units. What is the
period
order quantity?
A) 14.18
B) 3.67
C) 0.27
D) 4
E) cannot be determined from the given data - Answer- B) 3.67
Which of the following statements is true?
I. The EOQ should be used with lumpy demand.
II. Transportation cost should be included in the cost of ordering.
