Which of the following is not a factor in capacity planning? A) approach used to

Question

Which of the following is not a factor in capacity planning? A) approach used to measure capacity B) economics of scale C) prepare to deal with capacity in "chunks" D) identify the best operating level E) proximity to suppliers What costs are considered in the basic EOQ model? A) annual shortage costs + annual holding costs B) annual purchasing costs + annual holding costs C) annual ordering costs + annual holding costs + annual shortage costs D) annual purchasing costs + annual ordering costs + annual holding costs + annual shortage costs E) annual ordering costs + annual holding costs

Explanation / Answer

Q6. C 37.5

Breakeven means profit = 0 , Profit = (50-v)*20000 - 250000 = 0. Solving this equation for v (cariable cost), we get v = 37.5

Q7. A 3174

Mean Square Error (MSE) = ( (614-600)2 + (480-480)2 + (500-550)2 + (500-600)2 ) / 4 = 3174

Q8. D 18.75%

Increase in productivity = New output / Old output -1 = 300*(1-5%) / (300 * (1 - 20%) - 1 = 0.1875 = 18.75%

Q9. D Proximity to suppliers

Q10. E. Annual ordering cost + annual holding cost

EOQ model aims at minimizing the total inventory cost, comprising of the annual ordering cost and annual holding cost.

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