Question 1

Best Tools maintains an average finished goods inventory of $15 million and its annual cost of goods sold is $180 million.How many times per year do they turn over their inventory?

Accepted Answer

The answer of Best Tools maintains an average finished goods...

Question 2

The rate at which firms use up their inventory is known as economic inventory rate.

Accepted Answer

The rate at which firms use up their inventory is known as inventory turnover rate, not economic inventory rate.

Question 3

If a firm turns over inventory once a week,they would have 7 days' worth of inventory on hand.

Accepted Answer

Turning over inventory once a week means the firm replenishes its inventory every week, which implies it has approximately 7 days' worth of inventory on hand at any given time.

Question 4

If a firm has annual cost of goods sold of $100 million and turn over inventory twice a month,the average inventory they carry would be

Accepted Answer

The average inventory is calculated by dividing the annual cost of goods sold by the number of times inventory is turned over in a year. With an annual cost of goods sold of $100 million and inventory turned over twice a month (which is 24 times a year), the average inventory is $100 million / 24 = $4.167 million.

Question 5

Inventory that is completed and placed into inventory for sale at a later date is known as ________ inventory.

Accepted Answer

The answer of Inventory that is completed and placed into...

Question 6

Classic Car Dealers has an average of 150 cars in inventory.They sold 3000 cars this past year.Assuming 365 days in a work year,how many days' worth of inventory do they carry on average?

Accepted Answer

Days' worth of inventory = (Average inventory / Cars sold per year) * 365 days= (150 / 3000) * 365= 18.25 days= 18 days (rounded to the nearest whole number)

Question 7

Vendor-managed inventory is always consignment inventory.

Accepted Answer

Vendor-managed inventory (VMI) refers to a business model where the supplier manages the inventory levels of their products at the customer's location, but it does not necessarily mean the inventory is on consignment. Consignment inventory is a specific arrangement where the supplier retains ownership of the inventory until it is sold. In VMI, ownership of the inventory can transfer to the customer upon delivery, not necessarily upon sale.

Question 8

If a firm turns over inventory once a week,they would have ________ inventory turns per year.

Accepted Answer

The answer of If a firm turns over inventory once...

Question 9

Inventory that has been received and is in the production phase is known as ________ inventory.

Accepted Answer

The answer of Inventory that has been received and is...

Question 10

Inventory turnover is

Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold (COGS) by the average inventory. This ratio measures how many times a company's inventory is sold and replaced over a period.

Question 11

Best Tools turns over inventory once every month and its annual cost of goods sold is $180 million.The amount of average inventory they carry is ________.

Accepted Answer

The answer of Best Tools turns over inventory once every...

Question 12

Inputs to production that take the form of either fundamental supplies or subassemblies and components received from suppliers are known as ________.

Accepted Answer

The answer of Inputs to production that take the form...

Question 13

Stock that is owned by the supplier but is in the physical possession of the buyer is known as ________.

Accepted Answer

The answer of Stock that is owned by the supplier...

Question 14

The rate at which firms use up their inventory is known as ________.

Accepted Answer

The answer of The rate at which firms use up...

Question 15

Products that are waiting to be sold to customers are known as ________ inventory.

Accepted Answer

The answer of Products that are waiting to be sold...

Question 16

Products sent directly to customers and not placed in finished goods inventory are known as ________ inventory.

Accepted Answer

The answer of Products sent directly to customers and not...

Question 17

Walmart Stores sell the popular Tide detergent brand supplied by Procter and Gamble (P&G).In this case P&G owns and also manages the inventory;however,the inventory is housed in Walmart Stores.Such an arrangement is called

Accepted Answer

Vendor-managed Inventory (VMI) is a supply chain agreement where the supplier, in this case, Procter & Gamble, is responsible for maintaining the inventory levels at the retailer's store, which is Walmart. This includes owning and managing the inventory, even though it is housed at the retailer's premises.

Question 18

Inventory turnover is the average inventory divided by total sales.

Accepted Answer

Inventory turnover is calculated by dividing the cost of goods sold by the average inventory for a specific period.

Question 19

Best Home Cabinets orders wood,their main raw material,from their supplier once every week.The inventory model they are using is known as a ________ model.

Accepted Answer

The answer of Best Home Cabinets orders wood,their main raw...

Question 20

Materials stored to support the functioning of the business are known as ________.

Accepted Answer

The answer of Materials stored to support the functioning of...

Quiz 9: Inventory Management Fundamentals and Independent Demand