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Write True if the statement is correct and False if it is incorrect in the following questions in the space provided (1 pt. each):

1. Carrying cost refers to the variable cost of keeping items on hand, including interest, storage and handling, taxes, insurance, and shrinkage.
2. Market models are very effective where there are leading indicators and simple deterministic relationships causing demand.
3. In the economic ordering quantity (EOQ) model, deviating from the optimal order quantity even in small amounts is very costly.
4. Lead-time demand is given by the consumption rate times the lead time.
5. In the continuous review system, ordering is triggered by the inventory position reaching the reorder quantity.

Sagot :

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Final answer:

Explains carrying cost, market models, EOQ model, lead-time demand, and continuous review system.


Explanation:

1. True
Carrying cost includes various expenses such as interest, storage, handling, taxes, insurance, and shrinkage.
2. False
Market models are effective with complex relationships, not just simple deterministic ones.
3. True
Even small deviations from the optimal order quantity in EOQ model can incur significant costs.
4. True
Lead-time demand is determined by consumption rates multiplied by lead time.
5. False
In the continuous review system, the reorder point triggers ordering, not the inventory reaching the reorder quantity.


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