4- Some restaurants, when busy, let customers read menus and place orders before

Question

4- Some restaurants, when busy, let customers read menus and place orders before being seated, namely, while waiting in line for a table. This improves customer experience because:

a- Uncertain waits seem longer than certain waits.

b- Sharing information decreases customer unhappiness.

c- In process waits seem shorter than pre-process waits

d- It lessens the perception of unfairness in waiting

5- A company reports annual sales of $5 million, cost of goods sold of $2 million, inventory of $.5 million, and net income of $0.75 Million. What are the company's annual inventory turns?

a- 4

b- .25

c- 10

d- .1

6- A bakery uses 80 bags of chocolate chips each year. The chocolate chips are purchased from a supplier for a price of $80 per bag and an ordering cost of $20 per order. Bakery A's annual inventory holding cost percentage is 40%. The bakery orders chocolate chip bags 2 times every year. What is their total annual cost of ordering and holding inventory? a- 800 b- 1360 c- 680 d- 168 7- A company sells 600 bottles of dietary supplements per week at $100 per bottle. The supplement is ordered from a supplier who charges a fixed cost of $30 per order, and $50 per bottle. The annual inventory holding cost is 40%. Assume the company operates 50 weeks in a year. What is the optimal number of bottles the company should order?

a- 300

b- 212

c- 42

d- 30

Explanation / Answer

4.

It is found that customers have more patience during the delivery of core services than pre and post delivery of services. Thus, if customers are asked for preference while waiting, it will reduce waiting time during process.

ANS: C.

5.

Inventory invested = $0.5M

Cost of Goods sold = $2M

Inventory turnover ratio = (cost of goods sold/inventory invested)

Inventory turnover ratio = IR = ($2/$0.5) = 4 times

ANS: a. 4

6.

Annual Demand = A = 80 bags

Cost per bag = C = $80

Ordering Cost = S = $20

Inventory holding charge = I = 40%

Number of orders per year = 2

Order Size = Demand/no. of orders = 60/2 = 30 bags per order

Annual Ordering Cost = no. of orders x cost per order = 2 x 20 = $40

Annual holding Cost = Average inventory x holding charge x unit cost

Annual holding Cost = (Q/2) x I x C = 40/2 x 0.4 x 80 = $640

Annual Ordering and Holding cost = 4 + 640 = $680

ANS: c. 680

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