Question 1

When managing inventory to meet predictable variability, firms use which of the following approaches?&#10;A)Using common components across multiple products.&#10;B)Using specific components across multiple products.&#10;C)Using multiple components across specific products.&#10;D)None of the above.&#10;

Accepted Answer

Using common components across multiple products is the approach in which a firm designs common components used in various products, with each product having predictably variable demand that results in relatively constant overall demand. Therefore, the result in the demand for the components will be constant.

Question 2

Why must firms decide which inventory to build and which to not?&#10;A)Due to limited demand.&#10;B)Due to limited production.&#10;C)Due to access demand season.&#10;D)Due to limited labor.&#10;

Accepted Answer

When most of the products a firm produces have the same peak demand season, a firm must then decide which inventory to build during the off-season. The idea is to build products during the off-season that have more predictable demand because there is less to be learned about their demand by waiting.

Question 3

What is a cycle inventory in a supply chain?&#10;A)Average inventory.&#10;B)Scarped inventory.&#10;C)Fragile inventory.&#10;D)None of these.&#10;

Accepted Answer

Cycle inventory is the average inventory in the supply chain due to either production or purchases in lot size that are larger than those demanded by the consumer.

Question 4

In a ___________ supply chains, there are many stages with many players at each stage and one stage supplying another.&#10;A)Multi-directive cycle inventory.&#10;B)Multi-echelon cycle inventory.&#10;C)Both of these.&#10;D)None of these.&#10;

Accepted Answer

In a multi-echelon cycle inventory supply chain, there are many stages with many players at each stage and one stage supplying another. Also, each participant in this system must decide on their lot size.

Question 5

Safety inventory is an inventory carried for the purpose of satisfying demand that ________________ for a given period.&#10;A)Exceeds the amount forecasted.&#10;B)Exceeds the supply forecasted.&#10;C)Diminishes the demand forecasted.&#10;D)Diminishes the supply forecasted.&#10;

Accepted Answer

Safety Inventory is inventory carried for the purpose of satisfying demand that exceeds the amount forecasted for a given period. It is carried because demand forecasts are uncertain and a product shortage may result if actual demand exceeds the forecast demand.

Question 6

There are several ways to measure product availability. Which of the following is not considered a measure?&#10;A)Product fill rate.&#10;B)Cycle service level.&#10;C)VAT rate.&#10;D)Order fill rate.&#10;

Accepted Answer

All availability measures are defined on average over a given time frame. Product fill rate, order fill rate, and cycle service level are all considered possible measures for product availability. VAT rate is a kind of tax.

Question 7

Replenish policies determine the cycle and safety inventories along the ____________and the ___________.&#10;A)Demand,; supply.&#10;B)Fr; CSL.&#10;C)Network; framework.&#10;D)None of the above.&#10;

Accepted Answer

A replenishment policy consists of decisions regarding when to reorder and how much to reorder. These decisions define the cycle and safety inventories along the fr (product fill rate) and the CSL(cycle service level).

Question 8

A store manager at D&N clothing line continuously tracks the inventory of Jeans. They order 700 Jeans when the inventory drops below 300. In this case, the size of the order does not change from one order to the next. The tine between orders may fluctuate given variable demand. This example is of a replenishment policy known as ____________.

A)Continuous Review
B)Non-continuous Review
C)Subjective Review
D)Imperative Review

Accepted Answer

In continuous review, inventory is continuously tracked and an order for a lot size is placed when the inventory declines to the reorder point, or ROP.

Question 9

Substitution in inventories only occurs when __________.&#10;A)Suppliers make the decision to substitute&#10;B)Customers make the decision to substitute&#10;C)Manufacturers make the decisions to substitute&#10;D)All of the above.&#10;

Accepted Answer

Substitution in inventories occurs when suppliers, manufacturers, or customers make the decision to substitute. For example, the manufacturer will typically substitute a higher value product for a lower value product, or the customer will perform substitution if he finds Product A unavailable by replacing it with Product B.

Question 10

Which of the following results in inventory build-ups in low-demand periods?&#10;A)Level strategy.&#10;B)Chase strategy.&#10;C)Hybrid strategy.&#10;D)None of these.&#10;

Accepted Answer

In a level strategy, a stable machine capacity and work force are maintained with a constant output rate. Here production is not synchronized with demand and inventories are either built up in anticipation of future demand or backlogs are carried over from high to low demand periods.

Question 11

___________ results in low levels of inventory in the supply chain and high levels of change in capacity and work force.&#10;A)Subcontracting.&#10;B)Resource planning.&#10;C)A chase strategy.&#10;D)A production leveling strategy.&#10;

Accepted Answer

The answer of ___________ results in low levels of inventory...

Question 12

In a time flexibility strategy, the results are in ______levels on inventory.&#10;A)Low.&#10;B)High.&#10;C)Both.&#10;D)No change in levels.&#10;

Accepted Answer

The answer of In a time flexibility strategy, the results...

Question 13

_______ makes the best use of material, labor, and equipment and maintains inventory investment at the required levels.&#10;A)MRP&#10;B)MPR II&#10;C)MPS&#10;D)A production plan&#10;

Accepted Answer

The answer of _______ makes the best use of material,...

Question 14

Which of the following statements is correct about obtaining a high level of accuracy for inventory records?&#10;A)It will usually lead to a reduction of inventory levels.&#10;B)It is not necessary to achieve because of safety stocks and safety lead-time.&#10;C)It will result in savings that are likely to be small and difficult to determine.&#10;D)It is probably impossible to achieve and will be costly to obtain.&#10;

Accepted Answer

The answer of Which of the following statements is correct...

Question 15

An inventory turnover ratio:&#10;A)Measures how often a company moves its inventory out to its supplies within a systematic period of time.&#10;B)Measures the predictability of inbound inventories.&#10;C)Measures the profitability of trading inventories.&#10;D)None of the above.&#10;

Accepted Answer

The answer of An inventory turnover ratio:&#10;A)Measures how often a...

Question 16

How is inventory turnover ratio calculated?&#10;A)By dividing the cost of goods sold by the average inventory.&#10;B)By multiplying the beginning and ending inventory, then dividing by 4.&#10;C)Both by A and B.&#10;D)It cannot be calculated&#10;

Accepted Answer

The answer of How is inventory turnover ratio calculated?&#10;A)By dividing...

Question 17

What is an average inventory?&#10;A)The sum of the current inventory and the beginning inventory divided by 2.&#10;B)The sum of the current inventory and the ending inventory divided by 4.&#10;C)The sum of the beginning inventory and the current inventory divided by 10.&#10;D)Both A and C.&#10;

Accepted Answer

The answer of What is an average inventory?&#10;A)The sum of...

Question 18

How do you determine a cost of goods sold?&#10;A)Calculate the average inventory&#10;B)Calculate the inventory turnover ratio.&#10;C)Calculate the gross profit in a quarter.&#10;D)Both A and B.&#10;

Accepted Answer

The answer of How do you determine a cost of...

Question 19

What is the formula of a Gross Margin Return on Investment (GMROI)?&#10;A)Gross margin/total inventory cost.&#10;B)Gross margin/average inventory cost.&#10;C)Total Inventory + average inventory/gross margin.&#10;D)All of the above formulas.&#10;

Accepted Answer

The answer of What is the formula of a Gross...

Question 20

Both inventory turnover and GMROI are stated as an annual turnover, but due to ________ items they may be measured for a period of few months.&#10;A)Defense&#10;B)Electronic&#10;C)Seasonal&#10;D)Fragile&#10;

Accepted Answer

The answer of Both inventory turnover and GMROI are stated...

Question 21

Which of the following is the best reason to justify the fact that Inventory turn and GMROI should be calculated quarterly rather than annually?&#10;A)Due to frequent fluctuation in sales and inventory.&#10;B)Due to frequent fluctuation in average and total Inventory.&#10;C)Due to frequent depreciation.&#10;D)All of the above.&#10;

Accepted Answer

The answer of Which of the following is the best...

Deck 8: Inventory