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# MCQs on forecasting, inventory

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Please assist our study group by correctly answering the following study questions:

1. Sensitivity analysis of EOQ refers to:

a. the attitude of top management toward the use of the EOQ model
b. an assessment of the impact of obsolescence upon the EOQ
c. analysis of how much the EOQ will change when other variable change
d. analysis of the impact of stock shortages on customers or on production

2. Consider an inventory situation in which all the EOQ assumptions are met except there are quantity discounts. When a person orders more than the EOQ so that the discount price can be had, which of the following is true?

a. Total ordering cost usually decrease relative to EOQ cost
b. Total purchase cost usually increase realative to EOQ cost
c. Total holding cost ususally decreases relative to EOQ cost
d. Holding cost per unit usually increases relative to EOQ cost

3. As one increases the number of periods used in teh calculation of a moving average:

a. the emphasis placed on more recent data remains the same
b. greater emphasis is placed on more recent data
c. less emphasisis placed on more recent data
d. it requires a computer to automate the calculations

4. As the service level increases,

a. safety stock increases at a decreasing rate
b. safety stock increases at an increasing rate
c. safety stock decreases at an increasing rate
d. safety stock decreases at a decreasing rate

5. Which of the following is NOT a characteristic of trend projections?

a. The variable being predicted is the Y variable
b. Time is the X variable
c. It is useful for predicting the value of one variable based on time trend
d. It is helpful for determining if time is causing the dependent variable

6. Which of the following is not a problem with moving average models?

a. Large number of periods may smooth out real changes
b. They take a considerable period of time to construct
c. They don't pick up trends in time to react to the trends
d. They require that lost of past data be kept