Exhibit 3.5 The Following Questions Are Based on This Problem and Accompanying

question 35

Multiple Choice

Exhibit 3.5
The following questions are based on this problem and accompanying Excel windows.
A company is planning production for the next 4 quarters. They want to minimize the cost of production. The production cost is stable but demand and production capacity vary from quarter to quarter. The maximum amount of inventory which can be held is 12,000 units and management wants to keep at least 3,000 units on hand. Quarterly inventory holding cost is 3% of the cost of production. The company estimates the number of units carried in inventory each month by averaging the beginning and ending inventory for each month. There are currently 5,000 units in inventory. The company wants to produce at no less than one half of its maximum capacity in any quarter.
-Refer to Exhibit 3.5. What formula could be entered in cell F20 in the accompanying Excel spreadsheet to compute the Total Cost for all four quarters?

• A) SUMPRODUCT($C$4:$F$4,C17:F17)
• B) SUM(C17:F17) + SUM(C18:F18)
• C) PRODUCT(SUM(C14:F15,C17:F18)
• D) SUMPRODUCT(C4:F4,C14:F14) + SUMPRODUCT(C6:F6,C15:F15)

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Definitions:

Standard Deviation

A statistical measure of the dispersion or variation in a set of numbers, indicating how spread out the values are.

Inverse Relationship

A type of correlation where one variable increases while the other decreases, and vice versa.

Negative Correlation

A linkage between two variables that demonstrates an inverse relationship: one rises as the other falls.

Correlational Research

A research method that examines the relationship between two or more variables to determine if they are associated.