Deck 9: Inventory Management

Question 1

________ inventory represents all activities carried out in advance of a customer's arrival.

A) Finished goods
B) Raw materials
C) Buffer
D) Components
E) Service

Answer 1

E

Question 2

Products that are used indirectly are known as ____________ inventory:

A) Cycle stock
B) Anticipation inventory
C) MRO
D) Safety stock
E) Pipeline inventory

Answer 2

C

Question 3

Inventory policy addresses the basic questions of _____ and _____ to order:

A) Where and how much
B) Which supplier and how much
C) How many suppliers and how much
D) When to order and how much
E) None of the above

Answer 3

D

Question 4

When seeking a responsive inventory system, the optimal choice would be:

A) Fixed-time period
B) EOQ
C) Periodic
D) Fixed-order quantity
E) None of the above

Question 5

The quantities of all products or materials in stock are known as ___________.

A) Finished goods
B) Raw materials
C) Inventory
D) Components
E) Buffer

Question 6

The inventory utilized during a production cycle is known as:

A) Cycle stock
B) Anticipation inventory
C) Pipeline inventory
D) MRO
E) None of the above

Question 7

Reasons to carry inventory include:

A) Balance supply and demand
B) Cover lead time demand
C) Operational independence
D) Buffer uncertainty
E) All of the above

Question 8

The fixed-period inventory system requires holding more __________ inventory:

A) Cycle
B) Safety stock
C) Pipeline
D) Anticipation
E) MRO

Question 9

__________ inventory must be accounted for even though it might not be in transit and not in stock.

A) Cycle stock
B) Anticipation inventory
C) MRO
D) Safety stock
E) Pipeline inventory

Question 10

_________ costs are generally fixed and include all aspects of procuring an item.

A) Variable costs
B) Ordering costs
C) Holding costs
D) Shortage costs
E) None of the above

Question 11

The costs of being out of stock and lost customer goodwill are known as:

A) Fixed costs
B) Ordering costs
C) Holding costs
D) Shortage costs
E) None of the above

Question 12

In a _____________ inventory system, the order quantities vary during each period.

A) Fixed-time period
B) EOQ
C) Periodic
D) Fixed-order quantity
E) None of the above

Question 13

Taxes and opportunity costs of capital are examples of:

A) Fixed costs
B) Ordering costs
C) Holding costs
D) Shortage costs
E) None of the above

Question 14

The fixed-order quantity inventory system is optimal for ____________ products:

A) Commodity
B) Functional
C) High-value
D) End of life
E) All of the above

Question 15

A form of manufacturing inventory is:

A) Skills
B) Office space
C) Work-in-process
D) Raw materials
E) c and d

Question 16

Costs that vary depending on the amount of inventory in stock are known as:

A) Ordering
B) Holding
C) Shortage
D) Interest
E) None of the above

Question 17

In order to cushion against uncertainties in demand companies carry _______ inventory:

A) Cycle stock
B) Anticipation inventory
C) MRO
D) Safety stock
E) Pipeline inventory

Question 18

When marketing is planning a large promotion, a company might stock _______ inventory:

A) Cycle stock
B) Anticipation inventory
C) Pipeline inventory
D) MRO
E) None of the above

Question 19

A distinction of the _____________ inventory system is that inventory is monitored on a continual basis.

A) Fixed-time period
B) EOQ
C) Periodic
D) Fixed-order quantity
E) None of the above

Question 20

The fixed-order quantity inventory system assumes a ___________ demand rate.

A) Variable
B) Constant
C) Accelerated
D) Intermittent
E) Lagging

Question 21

An organization's inventory policy relates to where and how much to order.

Question 22

___________ demand refers to the demand for components or subassemblies.

A) Independent
B) Variable
C) Manufacturing
D) Dependent
E) None of the above

Question 23

Companies may invest in anticipation inventory in preparation for a promotion or event.

Question 24

The cost of a stock out could be greater than holding and ordering costs combined.

Question 25

Cycle stock inventory serves the purpose of providing a cushion for uncertainties in demand.

Question 26

It is necessary to carry inventory to cover the time between order of product and delivery.

Question 27

The expenses of insuring product and product obsolescence are examples of holding costs.

Question 28

Holding costs of inventory are fixed depending on the amount of inventory in stock.

Question 29

Work-in-process is a form of manufacturing inventory.

Question 30

Inventory refers to the quantities of products or materials in stock.

Question 31

The _______ inventory classification model allows a company to classify inventory based on degree of importance.

A) VMI
B) EOQ
C) ABC
D) MRP
E) ROP

Question 32

Inventory is costly, so the best policy is to carry little to no inventory.

Question 33

A significant advantage of vendor managed inventory (VMI) is:

A) More control for the vendor
B) Less financial investment for the customer
C) Collaboration between vendor and customer
D) All of the above
E) None of the above

Question 34

Ordering costs are typically fixed and can be reduced by ordering less frequently.

Question 35

The relationship between independent and dependent demand for a product is typically outlined in:

A) EOQ model
B) Bill of materials
C) Sales and operations plan
D) MRP
E) None of the above

Question 36

Only manufacturing organizations carry inventory.

Question 37

In service organizations, people can be considered inventory.

Question 38

It may make sense for companies to hold larger quantities of inventory because of the benefits of economic purchase orders.

Question 39

An example of an item at an automobile manufacturer that would call for independent demand analysis is:

A) Automobile
B) Engine
C) Windshield
D) Tires
E) Steel

Question 40

Inventory represents cash that cannot be utilized for other investments.

Question 41

The fixed-order quantity inventory system is also known as the EOQ model.

Question 42

Dependent demand in a manufacturing organization relates to the demand for components or subassemblies.

Question 43

One advantage of vendor managed inventory is that the vendor has more control over its products.

Question 44

The optimal inventory system for high value items is the fixed-time period system.

Question 45

When responsiveness is important, the optimal inventory system is the fixed-order quantity system.

Question 46

In ABC inventory analysis, "C" items do not typically require managerial involvement.

Question 47

ABC analysis is useful to different varying service levels to different products.

Question 48

The reorder point (ROP) should be established to cover demand during lead time plus safety stock.

Question 49

Briefly define holding costs and inventory costs, and explain the relationship between the two when defining an inventory policy

Question 50

The fundamental questions for an inventory system include how much and when to order.

Question 51

Order quantities are fixed in the fixed-time period inventory system.

Question 52

The EOQ should minimize the sum of ordering and shortage costs.

Question 53

A key aspect of the fixed-order quantity inventory system is defining a reorder point.

Question 54

Demand for a finished product is known as dependent demand.

Question 55

Briefly describe the concept of the ABC inventory classification model.

Question 56

Companies utilize the EOQ model to derive quantities for dependent demand items.

Question 57

The fixed-period inventory system typically requires holding greater safety stock.