Assesment Quiz Formulas

Question 1

Q Optimal (Q*)

Accepted Answer

sqroot(2DS/H)

Question 2

# of times to order a year

Accepted Answer

D/Q*

Question 3

# of days/weeks/months elapsed between two consecutive orders

Accepted Answer

Q*/D x # of days/weeks/months a year

Question 4

Cost of Orders per Year (annual ordering cost)

Accepted Answer

(D/Q*) x S

Question 5

Cost of Holding Inv per Year (annual holding cost)

Accepted Answer

(Q*/2) x H

Question 6

Total Annual Cost

Accepted Answer

Cost of Holding Inv per Year + Cost of Orders per Year (values should match if using Q*)

Question 7

Annual Cost to Carry Safety Stock

Accepted Answer

SS x H

Question 8

Reorder Point

Accepted Answer

ROP = (dbar x L) + SS (dbar and L need to be same unit)

Question 9

Holding Cost Rate

Accepted Answer

H = C x i

Question 10

Avg Inv Within Firm

Accepted Answer

(Q*/2) + SS

Question 11

Avg Pipeline Inv

Accepted Answer

dbar x L

Question 12

Total Avg Inv Owned by Firm (pay upon ordering)

Accepted Answer

(Q*/2) + SS + (dbar x L)

Question 13

Total Avg Inv Owned by Firm (cash on delivery)

Accepted Answer

(Q*/2) + SS

Question 14

Rule #1

Accepted Answer

if avg inv increases, holding inv cost also increases

Question 15

Avg Inv (w/o SS)

Accepted Answer

Q*/2

Question 16

Annual Purchase Cost

Accepted Answer

C x D

Question 17

D

Accepted Answer

demand rate (units/yr)

Question 18

C

Accepted Answer

cost of purchasing or producing a unit (dollars/(unit))

Question 19

S

Accepted Answer

setup cost or per order or per production run (dollars/order)

Question 20

H

Accepted Answer

annual holding cost per unit of inventory (dollars/(units)/year)

Question 21

i

Accepted Answer

annual percentage holding cost

Question 22

Q

Accepted Answer

quantity of an order (units)

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