Question: All else being equal, as the setup or ordering cost per order decreases, the optimal order quantity:

Answer Options: a) Stays the same. b) Decreases proportionally. c) Increases proportionally. d) Decreases, but at a lesser rate. e) Increases, but at a lesser rate.

Answer: d) Decreases, but at a lesser rate.

Question: If the demand is unchanged, increasing the frequency of ordering will cause:

Answer Options: a) Ordering costs to increase and holding costs to decrease. b) Ordering costs to decrease and holding costs to increase. c) Both ordering and holding costs to decrease. d) Both ordering and holding costs to increase. e) None of the above.

Answer: a) Ordering costs to increase and holding costs to decrease.

Question: All else being equal, if one chooses an order quantity that is double the optimal order quantity, total inventory costs:

Answer Options: a) Increase 100% from optimal. b) Increase 50% from optimal. c) Increase 25% from optimal. d) Decrease 50% from optimal. e) Stay the same as optimal.

Answer: c) Increase 25% from optimal.

Question: Which of the following is not an assumption of the EOQ inventory model?

Answer Options: a) Instantaneous production b) Instantaneous replenishment c) Setup or ordering costs are fixed. d) No interaction between products. e) None of the above.

Answer: a) Instantaneous production