Question

Which of the following is NOT an example of an ordering cost?

Select one:

a. receiving costs

b. salespeople’s salaries costs

c. clerical costs of preparing documents

d. insurance costs on shipment

Inventory management identifies an economic order quantity that

Select one:

a. minimizes the total costs of ordering and carrying inventory.

b. maximizes the stockout costs.

c. minimizes the costs of ordering.

d. maximizes the cost of carrying inventory.

If inventory consists of goods produced internally, the inventory-related costs are

Select one:

a. ordering and carrying costs.

b. setup costs and carrying costs.

c. ordering and setup costs.

d. both a and c.

Answer 1

Question:1

Solution: Answer is option B. since salaries of sales people is related to sell an item but it's not a component of order cost to purchase inventory.

And the other costs given in the rest option are all related to place an order for purchase of something.

Question:2

Solution: Answer is option A. Because at Economic Order Quantity under inventory management methods, Ordering cost and carrying cost are lower than any other level of order size. And also these cost are equal to each other at Economic Order quantity.

Rest other options are wrong and irrelevant.

Question3

Solution: Answer is option A. Ordering cost & carrying cost. Since these are inventory related costs and the setup costs is related to management & operation of machines etc.