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MCQs on Inventory and forecasting

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1. The annual demand for a product is 1,000 units. The company orders 200 units each time an order is placed. The lead-time is 6 days, and the company has determined that 20 unites should be held as a safety stock. There are 250 working days per year. What is the reorder point?

a. 20
b. 24
c. 44
d. 120

2. Mark Achin sells 3,600 electric motors each year. The cost of these is $200 each, and demand is constant throughout the year. The cost of placing an order is $40, while the holding cost is $20 per unit per year. There are 360 days per year and the lead-time is 5 days. If Mark orders 200 units each time he places an order, what would his total ordering cost be for the year?

a. $2,720
b. $2,000
c. $720
d. $200

3. Enrollment in a particular class for the last four semesters has been 120, 126, 110, and 130. Suppose a one-semester moving average was used to forecast enrollment (this is sometimes referred to as a naive forecast). Thus, the forecast for the second semester would be 120, for the third semester it would be 126, and for the last semester it would be 110. What would the MSE be for this situation?

a. 230.67
b. 196.00
c. 100.00
d. 42.00

4. Daily demand for newspapers for the last 10 days has been as follows: 12, 13, 16, 15, 12, 18, 14, 12, 13, 15. Forecast sales for the next day using a two-day moving average is:

a. 13
b. 14
c. 15
d. 28

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This posting contains solution to following questions on forecasting and inventory.

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