Question

MC and True or False (Assuming no other factors are changed)

Increasing the order quantity will increase the fill rate.

Increasing the Reorder Point will increase the fill rate.

Increasing the order quantity will increase the cycle service level.

Increasing the Reorder Point (ROP) will increase cycle service level.

The more expensive the process for ordering replenishment inventory, the larger the cycle inventory should be.

The longer the lead time for replenishment of inventory, the larger the cycle inventory should be

The Economic Order Quantity (EOQ) model is used to resolve the trade-off between total costs (holding plus ordering) and frequency of stock-outs.

Assuming that demand and lead time do not change, an increase in the ROP (reorder point) will result in a decrease in the number of annual inventory turns

In the pipeline, it will be common to see multiple replenishment orders outstanding at the same time because:

a. quantity ordered < expected demand during the leadtime

b. quantity ordered < Inventory on hand at time order is placed

c. Inventory on hand at time order is placed < quantity ordered

d. Inventory on hand at time order is placed < expected demand during the leadtime

Answer 1

Answer and Explanation:

Increasing the order quantity will increase the fill rate              FALSE  

Increasing Reorder Point will increase fill rate                           TRUE

Increasing Order Quantity will increase cycle service level      FALSE

Increasing reorder point will increase fill rate                             TRUE

The more expensive the process for ordering replenishment inventory, the larger the cycle inventory should be                    TRUE

The longer the lead time for replenishment inventory , the larger the cycle inventory should be                                                              TRUE

Economic Order Quantity ( EOQ) model is used to resolve the trade-off between total costs ( holding plus ordering ) and frequency of stock outs                                                                                        FALSE  

Assuming Demand and Lead time do not change , an increase in ROP ( reorder point ) will result in a decrease in the number of annual inventory turns                                                                      YES

In the pipeline , it will be common to see multiple replenishment orders outstanding at the same time  :

Inventory on hand at the time order is placed > Quantity ordered