Q&A Hero

Q: A firm that makes electronic circuits has been ordering a certain raw material 250 ounces at a time. The firm estimates that carrying cost is I = 30% per year, and that ordering cost is about $20 per order. The current price of the ingredient is $200 per ounce. The assumptions of the basic EOQ model are thought to apply. For what value of annual demand is their action optimal?

Q: Distribution includes only the physical movement of products. a. True b. False

Q: The soft goods department of a large department store sells 175 units per month of a certain large bath towel. The unit cost of a towel to the store is $2.50 and the cost of placing an order has been estimated to be $12.00. The store uses an inventory carrying charge of I = 27% per year. Determine (a) the optimal order quantity, (b) the order frequency, and (c) the annual holding and setup cost. If, through automation of the purchasing process, the ordering cost can be cut to $4.00, what will be (d) the new economic order quantity, (e) the order frequency, and (f) annual holding and setup costs? Explain these results.

Q: Small firms develop significantly more innovations than small companies. a. True b. False

Q: CentralUniversity uses $123,000 of a particular toner cartridge for laser printers in the student computer labs each year. The purchasing director of the university estimates the ordering cost at $45 and thinks that the university can hold this type of inventory at an annual storage cost of 22% of the purchase price. How many months' supply should the purchasing director order at one time to minimize the total annual cost of purchasing and carrying?

Q: The three main considerations in structuring a channel of distribution are cost, coverage, and customer service. a. True b. False

Q: The annual demand, ordering cost, and the annual inventory carrying cost rate for a certain item are D = 600 units, S = $20/order and I = 30% of item price. Price is established by the following quantity discount schedule. What should the order quantity be in order to minimize the total annual cost? Quantity 1 to 49 50 to 249 250 and up Price $5.00 per unit $4.50 per unit $4.10 per unit

Q: A brand includes the verbal identification of a productas well as symbols or other means of identifying a product. a. True b. False

Q: Montegut Manufacturing produces a product for which the annual demand is 10,000 units. Production averages 100 units per day, while demand is 40 units per day. Holding costs are $2.00 per unit per year, and setup cost is $200.00. (a) If the firm wishes to produce this product in economic batches, what size batch should be used? (b) What is the maximum inventory level? (c) How many order cycles are there per year? (d) What are the total annual holding and setup costs?

Q: In the physical development stage of the product development process, new products are analyzed resulting in ideas failing to show possible profitability being discarded. a. True b. False

Q: According to the Food and Drug Administration regulations, food products must have a standard nutrition label listing the amount of calories, fat, salt, and nutrients in the product. a. True b. False

Q: Lead time for one of Montegut Manufacturing's fastest moving products is 4 days. Demand during this period averages 100 units per day. What would be an appropriate re-order point?

Q: Because they have limited resources, small business need not formalize the product development process. a. True b. False

Q: What is a reorder point?

Q: Celestina Pugliese, creator of Ready Check Glo, felt her product served an overlooked market. a. True b. False

Q: How sensitive is the EOQ to variations in demand or costs?

Q: A bed and breakfast inn that adds a restaurant that is open to the public is an example of unrelated product offerings. a. True b. False

Q: Consider two inventory problems with identical demand, holding cost, and setup cost. In one, goods arrive instantly, but in the other goods arrive at a measurable rate. Which of these problems will have the larger optimal order quantity? Why?

Q: During the competitive advantage life cycle, firms can exploit a competitive advantage during the develop stage. a. True b. False

Q: What are the assumptions of the EOQ model?

Q: In some inventory models, the optimal behavior occurs where ordering costs and carrying costs are equal to one another. Provide an example of a model where this rule does not hold; explain how the model's results are optimal anyway.

Q: The product life cycle and competitive advantage life cycle differ in that the product life cycle reflects trends for a specific product or service, whereas the competitive advantage life cycle is based on multiple products or services. a. True b. False

Q: Product testing is the last step in the product development process. a. True b. False

Q: Compare the assumptions of the production order quantity model to those of the basic EOQ model.

Q: Strategies for goods marketing and services marketing are essentially identical. a. True b. False

Q: In a quantity discount problem, if the savings in annual product cost is smaller than the increase in the sum of annual setup cost and annual holding cost, the discount should be ________.

Q: 3PLs are considered more cost effective by many small businesses because it allows the company to focus on the primary operations and outsource the accounting challenges to another company. a. True b. False

Q: ________ is extra stock that is carried to serve as a buffer.

Q: A utility patent covers the appearance of a product and everything that is an inseparable part of the product. a. True b. False

Q: In the production order quantity model, the fraction of inventory that is used immediately and not stored is represented by the ratio of ________.

Q: If inventory needs grow with higher sales, the increase in accounts receivables will cover this cost. a. True b. False

Q: A(n) ________ model gives satisfactory answers even with substantial variations in its parameters.

Q: In the EOQ model, for a given level of demand, annual holding cost is larger as the order quantity is ________.

Q: F.O.B. origin, freight collect, is a delivery term that shifts all responsibility for freight costs to the buyer. a. True b. False

Q: It is important that small firms gain a competitive advantage which cannot be quickly imitated. a. True b. False

Q: In an economic order quantity problem, the total annual cost curve is at its ________ where annual holding costs equal annual setup costs.

Q: ________ is the time between placement and receipt of an order.

Q: Trademarks and service marks are legal terms indicating the exclusive right to use a brand. a. True b. False

Q: Consumer needs can be completely satisfied by proper customer relationship management. a. True b. False

Q: Which of the following statements about quantity discounts is FALSE? A) The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. B) In inventory management, item cost becomes relevant to order quantity decisions when a quantity discount is available. C) If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. D) The larger the annual demand, the less attractive a discount schedule will be. E) The smaller the ordering cost, the less attractive a discount schedule will be.

Q: Addressing a customer by name typically means very little to them. a. True b. False

Q: When quantity discounts are allowed, the cost-minimizing order quantity: A) is always an EOQ quantity. B) minimizes the sum of holding and ordering costs. C) minimizes the unit purchase price. D) may be a quantity below that at which one qualifies for that price. E) minimizes the sum of holding, ordering, and product costs.

Q: Small businesses must strive to understand post-purchase dissonance among their customers and to manage it effectively. a. True b. False

Q: A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 612 units. What is the average inventory for this problem? A) 61 B) 245 C) 300 D) 306 E) 490

Q: Regardless of the nature of the business, small firms can gain a competitive edge by providing exceptional customer service. a. True b. False

Q: The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. What is the production order quantity for this problem? A) 139 B) 174 C) 184 D) 365 E) 548

Q: Behavioral patterns and values that characterize a group of consumers in a target market are called a. reference groups. b. cultures. c. social classes. d. perceptual categories.

Q: Which of these statements about the production order quantity model is FALSE? A) The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. B) Because receipt is noninstantaneous, some units are used immediately and not stored in inventory. C) Average inventory is less than one-half of the production order quantity. D) All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. E) None of the above is false.

Q: June has always believed that the resale furniture store doesnt have quality furniture as it has been used by others. This _____ may cause her to avoid the store and shop at a store specializing in new furniture across town. a. attitude b. cognitive dissonance c. motivation d. perceptual categorization

Q: Which of the following statements regarding the production order quantity model is TRUE? A) It applies only to items produced in the firm's own production departments. B) It relaxes the assumption that all the order quantity is received at one time. C) It relaxes the assumption that the demand rate is constant. D) It minimizes the total production costs. E) It minimizes inventory.

Q: A customers email address would most likely be stored in which category of a customer profile? a. Personal information b. Demographics c. Psychographic data d. Transactions

Q: An inventory decision rule states, "When the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is TRUE? A) One hundred is the reorder point, and 14 is the order quantity. B) Fourteen is the reorder point, and 100 is the order quantity. C) The number 100 is a function of demand during lead time. D) Fourteen is the safety stock, and 100 is the reorder point. E) None of the above is true.

Q: Freida used a discount coupon to purchase a new product. In which category of the customer profile should this be recorded? a. Personal Information b. Lifestyle data c. Profile of past responses d. Transaction data

Q: Which of the following statements regarding the reorder point is TRUE? A) The reorder point is that quantity that triggers an action to restock an item. B) There is a reorder point even if lead time and demand during lead time are constant. C) The reorder point is larger than d L if safety stock is present. D) A shorter lead time implies a smaller reorder point. E) All of the above are true.

Q: A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order: A) all 4000 units at one time. B) 200 units per order. C) every 20 days. D) 10 times per year. E) none of the above

Q: Individual processes that ultimately give meaning to stimuli that confront consumers are known as a. perceptions. b. motivations. c. attitudes. d. opinions.

Q: A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup) costs. A) $400 B) $800 C) $1200 D) Zero; this is a class C item. E) Cannot be determined because the unit price is not known.

Q: What should entrepreneurs understand about sociological influences on customers?

Q: CRM is the business version of a. the Ten Commandments. b. the Bill of Rights. c. the Golden Rule. d. Maslows Hierarchy of Needs.

Q: For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $600. What is the inventory carrying cost per unit per year for this item? A) $1.50 B) $2.00 C) $3.00 D) $150.00 E) not enough data to determine

Q: Discuss the importance of why small businesses should offer personal attention. What are suggestions for implementing such procedures.

Q: A product whose EOQ is 400 units experiences a 50% increase in demand. The new EOQ is: A) unchanged. B) increased by less than 50%. C) increased by 50%. D) increased by more than 50%. E) cannot be determined

Q: Aspiring mystery writers study Agatha Christie to learn the art of writing that genre. In this case, Christie would be considered: a. how a subcultural analysis impacts marketing efforts. b. an opinion leader with which businesses want to affiliate. c. a reference group for mystery writers d. a social class because of her lifestyle choices.

Q: A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order. The revised EOQ is: A) three times as large. B) one-third as large. C) nine times as large. D) one-ninth as large. E) cannot be determined

Q: Sally is a new customer at Fit and Strong, a training facility for marathon athletes. Upon entering the business, the receptionist asked Sally to fill out a customer profile questionnaire in order to collect data for company files. What information is likely to be asked of Sally?

Q: Which of the following statements about the basic EOQ model is FALSE? A) If the setup cost were to decrease, the EOQ would fall. B) If annual demand were to double, the number of orders per year would increase. C) If the ordering cost were to increase, the EOQ would rise. D) If annual demand were to double, the EOQ would also double. E) All of the above statements are true.

Q: Juans belief that all low calorie sodas taste awful is an example of a. cognitive dissonance. b. the elimination of an item in an evoked set. c. perceptual categorization. d. unilateral indifference.

Q: Which of the following statements about the basic EOQ model is TRUE? A) If the ordering cost were to double, the EOQ would rise. B) If annual demand were to double, the EOQ would increase. C) If the carrying cost were to increase, the EOQ would fall. D) If annual demand were to double, the number of orders per year would increase. E) All of the above statements are true.

Q: Greg is a retired NBA basketball player who has returned to his small hometown to open a basketball gym. There are no other businesses in his area like his concept and he wants to reach his customers. What psychological influences on his consumers does Greg need to consider before opening his location and how will they apply to the basketball gym?

Q: In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $5 per unit per month, what is the economic order quantity? A) 24 B) 100 C) 141 D) 490 E) 600

Q: Regina is so satisfied with her pharmacist that she refers her friends and colleagues, providing a(n) _______ benefit of maintaining relationships with current customers. a. economic b. marketing c. psychological d. social

Q: In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will: A) increase by about 41%. B) increase by 100%. C) increase by 200%. D) increase, but more data is needed to say by how much. E) either increase or decrease.

Q: List the five major economic benefits of maintaining relationships with current customers.

Q: Most inventory models attempt to minimize: A) the likelihood of a stockout. B) the number of items ordered. C) total inventory-based costs. D) the number of orders placed. E) the safety stock.

Q: The reason that a group of uniformed people walking down the street playing musical instruments is recognized as a band is the result of a. characteristic profiling. b. evaluative criteria. c. perceptual categorization. d. problem recognition.

Q: A certain type of computer costs $1,000, and the annual holding cost is 25% of the value of the item. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity? A) 16 B) 70 C) 110 D) 183 E) 600

Q: If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand: Q* = A) is smaller than the holding cost per unit. B) is zero. C) is one-half of the economic order quantity. D) is affected by the amount of product cost. E) goes down if the holding cost per unit goes down.

Q: Caleb owns a small deli and is focusing on developing his business relationship with customers. What four underlying beliefs should Caleb consider in order to develop and provide great customer service?

Q: What is the primary purpose of the basic economic order quantity model shown below? Q* = A) to calculate the reorder point, so that replenishments take place at the proper time B) to minimize the sum of carrying cost and holding cost C) to maximize the customer service level D) to minimize the sum of setup cost and holding cost E) to calculate the optimum safety stock

Q: As an owner of a floral design business, Tims highest priority for the florists CRM program should be a. marketing efforts to bring in customers who havent bought flowers recently. b. finding the right computer software for an online floral ordering program. c. determining if existing customers are satisfied with past floral arrangements. d. identifying how often customers will purchase flowers.