OPM EXAM 2 UPDATED QUESTIONS AND ANSWERS
Bakery A sells bread for $2 per loaf that costs $0.50 per loaf to make. Bakery A gives an 80% discount for
its bread at the end of the day. What is the underage cost?
a. $0.10
b. $0.40
c. $0.50
d. $1.50 - CORRECT ANSWER✅✅d. $1.50
($2 - $0.50 = $1.50.)
The ________ is the cost of ordering one unit ________.
a. underage cost, exactly
b. underage cost, too few
c. overage cost, too few
d. overage cost, exactly - CORRECT ANSWER✅✅b. underage cost, too few
Which of the following is TRUE regarding the economic order quantity (EOQ) model?
a. Ordering cost per order is dependent on order quantity.
b. Holding cost per unit per year is independent of order quantity.
c. Demand rate is dependent on order quantity.
d. Holding cost per unit per year is dependent on the selling price per unit. - CORRECT ANSWER✅✅b.
Holding cost per unit per year is independent of order quantity.
Higher days of supply means ________ inventory. Higher turns means ________ inventory.
a. less, less
b. more, more
c. more, less
d. less, more - CORRECT ANSWER✅✅c. more, less
The inputs to the newsvendor model include all of the following except:
, a. fixed cost.
b. demand forecast.
c. overage cost.
d. underage cost - CORRECT ANSWER✅✅a. fixed cost.
C&A purchases fertilizer for its lawn-care business from a supplier who charges $30 per order and $50
per case. Each case consists of five bags of fertilizer. C&A needs 2000 bags of fertilizer a year. C&A's
annual holding costs are 30%. What is C&A's holding cost per case per year?
a. $10
b. $15
c. $5
d. $3 - CORRECT ANSWER✅✅b. $15
($50 * 30%) = $15
Firm A's demand for a product is 100,000 units. It has a holding cost of $10 per unit per year and an
ordering cost of $50 per order. If the firm is required to order an integer multiple of 500 units, what
order quantity should it use to minimize ordering and holding costs?
a. 1000
b. 2000
c. 1500
d. 500 - CORRECT ANSWER✅✅a. 1000
Store A purchases cases of fertilizer for its lawn-care business from a supplier who charges Store A $30
per order and $50 per case. Each case consists of five bags of fertilizer. Store A needs 2000 bags of
fertilizer a year. Store A's annual holding costs are 30%. If Store A's order quantity is 40 cases, what is its
average inventory level?
a. 89
b. 20
c. 45
d. 40 - CORRECT ANSWER✅✅b. 20
(Avg Inv. = 40/2)
Bakery A sells bread for $2 per loaf that costs $0.50 per loaf to make. Bakery A gives an 80% discount for
its bread at the end of the day. What is the underage cost?
a. $0.10
b. $0.40
c. $0.50
d. $1.50 - CORRECT ANSWER✅✅d. $1.50
($2 - $0.50 = $1.50.)
The ________ is the cost of ordering one unit ________.
a. underage cost, exactly
b. underage cost, too few
c. overage cost, too few
d. overage cost, exactly - CORRECT ANSWER✅✅b. underage cost, too few
Which of the following is TRUE regarding the economic order quantity (EOQ) model?
a. Ordering cost per order is dependent on order quantity.
b. Holding cost per unit per year is independent of order quantity.
c. Demand rate is dependent on order quantity.
d. Holding cost per unit per year is dependent on the selling price per unit. - CORRECT ANSWER✅✅b.
Holding cost per unit per year is independent of order quantity.
Higher days of supply means ________ inventory. Higher turns means ________ inventory.
a. less, less
b. more, more
c. more, less
d. less, more - CORRECT ANSWER✅✅c. more, less
The inputs to the newsvendor model include all of the following except:
, a. fixed cost.
b. demand forecast.
c. overage cost.
d. underage cost - CORRECT ANSWER✅✅a. fixed cost.
C&A purchases fertilizer for its lawn-care business from a supplier who charges $30 per order and $50
per case. Each case consists of five bags of fertilizer. C&A needs 2000 bags of fertilizer a year. C&A's
annual holding costs are 30%. What is C&A's holding cost per case per year?
a. $10
b. $15
c. $5
d. $3 - CORRECT ANSWER✅✅b. $15
($50 * 30%) = $15
Firm A's demand for a product is 100,000 units. It has a holding cost of $10 per unit per year and an
ordering cost of $50 per order. If the firm is required to order an integer multiple of 500 units, what
order quantity should it use to minimize ordering and holding costs?
a. 1000
b. 2000
c. 1500
d. 500 - CORRECT ANSWER✅✅a. 1000
Store A purchases cases of fertilizer for its lawn-care business from a supplier who charges Store A $30
per order and $50 per case. Each case consists of five bags of fertilizer. Store A needs 2000 bags of
fertilizer a year. Store A's annual holding costs are 30%. If Store A's order quantity is 40 cases, what is its
average inventory level?
a. 89
b. 20
c. 45
d. 40 - CORRECT ANSWER✅✅b. 20
(Avg Inv. = 40/2)
