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OPM Exam 2 Questions with Detailed Verified
Answers
Question: 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
Ans✅ ✅: d. $1.50
($2 - $0.50 = $1.50.)
Question: 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
Ans✅ ✅: b. underage cost, too few
Question: 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.
Ans✅ ✅: b. Holding cost per unit per year is independent of order quantity.
Question: Higher days of supply means ________ inventory. Higher
turns means ________ inventory.
a. less, less
b. more, more
c. more, less
d. less, more
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Ans✅ ✅: c. more, less
Question: The inputs to the newsvendor model include all of the
following except:
a. fixed cost.
b. demand forecast.
c. overage cost.
d. underage cost
Ans✅ ✅: a. fixed cost.
Question: 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
Ans✅ ✅: b. $15
($50 * 30%) = $15
Question: 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
Ans✅ ✅: a. 1000
Question: 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
OPM Exam 2 Questions with Detailed Verified
Answers
Question: 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
Ans✅ ✅: d. $1.50
($2 - $0.50 = $1.50.)
Question: 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
Ans✅ ✅: b. underage cost, too few
Question: 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.
Ans✅ ✅: b. Holding cost per unit per year is independent of order quantity.
Question: Higher days of supply means ________ inventory. Higher
turns means ________ inventory.
a. less, less
b. more, more
c. more, less
d. less, more
, Page | 2
Ans✅ ✅: c. more, less
Question: The inputs to the newsvendor model include all of the
following except:
a. fixed cost.
b. demand forecast.
c. overage cost.
d. underage cost
Ans✅ ✅: a. fixed cost.
Question: 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
Ans✅ ✅: b. $15
($50 * 30%) = $15
Question: 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
Ans✅ ✅: a. 1000
Question: 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
