In the EOQ Model with Planned Shortages,if Annual Demand Is

question 70

Multiple Choice

In the EOQ model with planned shortages,if annual demand is 500,holding cost is $200,ordering cost is $15,and back-order cost is $400,EOQ (rounded to the next whole number) is:

• A)8
• B)9
• C)11
• D)13
• E)113

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Definitions:

Derived-Demand Inventory

Inventory levels that are based on the anticipated demand for finished goods, driving the demand for raw materials as well.

Anticipated Finished Goods

The forecasted amount of products that will be completed and ready for sale at the end of a production cycle.

Restocking Inventory

The process of replenishing goods or materials within a business to ensure sufficient supply for operation or sale.

Kanban System

A workflow management method for defining, managing, and improving services that deliver knowledge work, aiming to visualize work, limit work in progress, and maximize efficiency.