BUSI 411 Operations Management
1. Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni
each day in preparing pizzas. Order
... [Show More] costs for pepperoni are $10.00 per order, and
carrying costs are 4 cents per pound per day. Lead time for each order is three days,
and the pepperoni itself costs $3.00 per pound. What is the economic order quantity for
pepperoni?
A. 20 pounds
B. 40 pounds
C. 60 pounds
D. 80 pounds
E. 100 pounds
2. The materials manager for a billiard ball maker must periodically place orders for resin,
one of the raw materials used in producing billiard balls. She knows that manufacturing
uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a
kilogram of resin in inventory. She also knows that the order costs for resin are $100 per
order, and that the lead time for delivery is four days. If order size was 1,000 kilograms
of resin, what would be the length of an order cycle?
A. .05 days
B. 4 days
C. 16 days
D. 20 days
E. 50 days
3. In the basic EOQ model, if lead time increases from five to 10 days, the EOQ will:
A. double.
B. increase, but not double.
C. decrease by a factor of 2.
D. remain the same.
E. increase, but more information is needed to calculate exactly how much.
4. The fixed-order-interval model would be most likely to be used for this situation:
A. A company has switched from mass production to lean production.
B. Production is done in batches.
C. Spare parts are ordered when a new machine is purchased.
D. Grouping orders can save shipping costs.
E. Demand is highly variable
5. The Operations Manager for Shadyside Savings & Loan orders cash from her home
office for her very popular "BIG BUCKS" automated teller machine, which only dispenses
$100 bills. She estimates that this machine dispenses an average of 12,500 bills per
month, and that carrying a bill in inventory costs 10 percent of its value annually. She
knows that each order for these bills costs $300 for clerical and armored car delivery [Show Less]