Question 1

Pilferage of small items such as pencils in the office and tools in the plant,is not rare.

Accepted Answer

Pilferage of small items in the workplace is common and not rare.

Question 2

Buffer stock is stock carried to prevent outages when supply exceeds expectations.

Accepted Answer

Buffer stock is carried to prevent outages when demand exceeds supply, not when supply exceeds expectations.

Question 3

Systems involving many stock-keeping units are dependent upon having an organized information system.

Accepted Answer

Systems involving many stock-keeping units (SKUs) require an organized information system to efficiently manage inventory levels, track sales, and analyze customer buying behaviors. Without an organized information system, it can be difficult to make informed decisions regarding inventory management and purchasing.

Question 4

Contingency planning for cancellations is better production management than reacting to cancellations after the fact.

Accepted Answer

Contingency planning involves preparing for potential cancellations ahead of time and having a plan in place to mitigate their impact. This is more effective than simply reacting to cancellations after they occur, which can lead to delays, production bottlenecks, and other issues. By planning ahead, production managers can minimize the impact of cancellations and ensure that production continues smoothly.

Question 5

Lead time is the interval between demand for units by customers and payment for the sales.

Accepted Answer

Lead time is the interval between placing an order with a supplier and receiving the goods or services. It is not related to payment for sales.

Question 6

Each unhappy customer represents a loss of goodwill,defined as the termination of the revenue generation of that customer.

Accepted Answer

Loss of goodwill refers to the loss of future revenue generation from a customer who has had a negative experience. Therefore, each unhappy customer represents a loss of goodwill.

Question 7

The book lists five main kinds of inventory costs: ordering,set-ups,carrying stock,out-of-stock,and costs of running the inventory system.

Accepted Answer

The answer of The book lists five main kinds of...

Question 8

Inventory is comprised of those stocks of items,merchandise,articles,necessities,etc.used to support production and operations,as well as all activities that maintain the processes of the organization,and that provide customer services.

Accepted Answer

This statement accurately defines what inventory is and how it is used within an organization.

Question 9

Lead time is the interval between order placement and receipt.

Accepted Answer

Lead time refers to the duration between when an order is placed and when the order is received.

Question 10

Vertical integration is achieved by buying companies able to provide components that are otherwise purchased from suppliers.

Accepted Answer

This is a correct statement about vertical integration. By buying companies that are able to provide components, a business can reduce its dependency on suppliers and ensure better control over its supply chain.

Question 11

When the supplier agrees to deliver small JIT quantities of the larger order on a specified schedule the agreement is called vendor releasing.The pricing schedule is based on the large order size.

Accepted Answer

This statement accurately describes the concept of vendor releasing.

Question 12

The pure dynamic case of inventory models is also called a one-period model.

Accepted Answer

The pure dynamic case of inventory models involves multiple periods and varying conditions over time, unlike a one-period model which is static and considers only a single period.

Question 13

Backorder costs include the effects of word-of-mouth praise on obtaining new customers.

Accepted Answer

Backorder costs typically refer to the costs associated with delays in fulfilling orders, such as lost sales, customer dissatisfaction, and additional shipping and handling costs, rather than the effects of word-of-mouth praise on obtaining new customers.

Question 14

Activity-based costing can help to ascertain an optimal size for the order department

Accepted Answer

Activity-based costing involves identifying the activities involved in a particular business process and assigning costs based on the resources consumed by each activity. By using this method to analyze the order department, it may be possible to identify areas of inefficiency and determine the optimal size for the department. Therefore, activity-based costing can aid in optimizing the size of the order department.

Question 15

Inventory is made internally or purchased externally.The decision is based on quality factors alone.

Accepted Answer

The decision to make or purchase inventory is not based on quality factors alone. Other factors such as cost, availability, lead time, and expertise required are also considered.

Question 16

Vendor releasing is where the buyer agrees to purchase large increments at one time.

Accepted Answer

Vendor releasing involves the buyer agreeing to purchase a predetermined amount of product over time, with the product being delivered in smaller, incremental shipments rather than in one large lot.

Question 17

One of the seven classes of inventory situations is order repetition (e.g.,static vs.dynamic) situations.

Accepted Answer

Order repetition situations refer to inventory situations where orders are placed repeatedly over time, either in a static (fixed) or dynamic (varying) fashion.

Question 18

OPP is best when the demand distribution is unknown or unstable.

Accepted Answer

OPP (Optimal Product Portfolio) strategies typically require understanding of demand patterns to effectively balance the portfolio; when demand is unknown or unstable, it becomes challenging to optimize the portfolio effectively.

Question 19

Because of the efficient serialized production of the job shop,ordering costs are low.

Accepted Answer

Job shops typically produce customized or specialized products, which do not follow a fixed, repetitive process. Consequently, each production order is unique, and the setup and preparation costs can be high, resulting in high ordering costs.

Question 20

Freshness dating puts pressure on operations to make and deliver products as much before the freshness date as possible.This results in a decrease in the amount of inventory being carried.

Accepted Answer

The answer of Freshness dating puts pressure on operations to...

Quiz 14: Inventory Management for Smooth and Continuous Demand Patterns