Question 1

The costs associated with reduced inventory results in lower profits.

Accepted Answer

Reduced inventory can lower costs associated with storage and handling, but it can also result in stockouts and lost sales, leading to lower profits. Maintaining an optimal level of inventory is important for maximizing profits.

Question 2

One of the daily,delicate balancing acts that Logistics managers have to perform involves the trade-off between customer satisfaction and cost to serve.

Accepted Answer

Logistics managers often have to make decisions that involve balancing the need for high levels of customer satisfaction with the need to keep costs down. This can be a delicate balancing act because increasing customer satisfaction, such as by offering faster delivery times or more personalized service, often comes at a higher cost to serve. On the other hand, keeping costs low, such as by using cheaper transportation modes or reducing inventory, may lead to lower levels of customer satisfaction.

Question 3

One of the drivers of the direct-to-store (direct distribution)approach is the decrease in trucking industry regulation.

Accepted Answer

The answer of One of the drivers of the direct-to-store...

Question 4

In a price break model of lot sizing the lowest cost quantity is always feasible.

Accepted Answer

In a price-break model of lot sizing, the lowest cost quantity may not always be feasible due to constraints such as storage capacity, budget limitations, or minimum order quantities.

Question 5

Firms keep supplies of inventory for which of the following reasons?
A)To maintain dependence of operations
B)To provide a feeling of security for the workforce
C)To meet variation in product demand
D)To hedge against wage increases
E)In case the supplier changes the design

Accepted Answer

Firms keep supplies of inventory to meet variation in product demand, as this allows them to have enough products on hand to meet customer demand without experiencing stockouts or delays in delivery. The other options listed do not accurately reflect the primary reason for firms to hold inventory.

Question 6

In a price break model of lot sizing,to find the lowest-cost order quantity,it is sometimes necessary to calculate the economic order quantity for each possible price and to check to see whether the lowest cost quantity is feasible.

Accepted Answer

This statement is true. In a price break model, there may be multiple order quantities that qualify for different price breaks, so calculating the economic order quantity for each possible price break can help determine the lowest cost option. However, it is important to also consider feasibility factors such as inventory capacity and demand variability when choosing the optimal order quantity.

Question 7

One of the drivers of the direct-to-store (direct distribution)approach is the increase in global sourcing.

Accepted Answer

With global sourcing, companies can ship products directly from manufacturers to their retail stores, eliminating the need for additional warehouses and reducing costs. This directly aligns with the direct-to-store approach in which products are sent directly to the stores without involving intermediaries such as warehouses or distributors.

Question 8

One of the drivers of the direct-to-store (direct distribution)approach is the upstream migration of value-added logistics services.

Accepted Answer

Direct-to-store approach involves bypassing the traditional distribution channels and directly delivering products to the retail store. One of the reasons for this approach's popularity is the value-added logistics services like inventory management, quality control, etc., which are migrating upstream and closer to the source of production. This makes it more feasible for manufacturers to adopt the direct-to-store approach.

Question 9

Which of the following is not one of the categories of manufacturing inventory?
A)Raw materials
B)Finished products
C)Component parts
D)Just-in-time
E)Supplies

Accepted Answer

Just-in-time is a method of inventory management that aims to minimize inventory levels by receiving and producing goods only when they are needed in the manufacturing process. It is not a category of manufacturing inventory like raw materials, finished products, component parts, and supplies.

Question 10

Which of the following is usually included as an inventory holding cost?
A)Order placing
B)Breakage
C)Typing up an order
D)Quantity discounts
E)Annualized cost of materials

Accepted Answer

Breakage, also known as shrinkage, is a cost associated with holding inventory. It refers to the loss of inventory due to spoilage, theft, damage, or other reasons while the inventory is being held in storage.

Question 11

One of the daily,delicate balancing acts that Logistics managers have to perform involves the trade-off between inventory costs and the cost of stock-outs.

Accepted Answer

This statement is true. Logistics managers need to balance inventory costs and the costs associated with stock-outs in order to maintain a functional supply chain. Maintaining high levels of inventory can be expensive, but not having enough inventory on hand can lead to stockouts, lost sales, and dissatisfied customers.

Question 12

The average cost of inventory in the United States is 20 to 25 percent of its value.

Accepted Answer

The answer of The average cost of inventory in the...

Question 13

When developing inventory cost models,which of the following are not included as costs to place an order?
A)Phone calls
B)Taxes
C)Clerical
D)Calculating quantity to order
E)Postage

Accepted Answer

The answer of When developing inventory cost models,which of the...

Question 14

Which of the following is one of the categories of manufacturing inventory?
A)Economic Order Inventory
B)Work-in-process
C)Quality units
D)JIT Inventory
E)Re-order point

Accepted Answer

Work-in-process is one of the categories of manufacturing inventory, which refers to items that have begun the production process but are not yet finished goods. Economic Order Inventory and Re-order point are inventory management techniques, while Quality units and JIT (Just-In-Time) Inventory are not categories of manufacturing inventory.

Question 15

Savings from reduced inventory results in increased profit.

Accepted Answer

When inventory levels are reduced, the cost of carrying and storing inventory decreases, resulting in increased profits. This is because less money is tied up in inventory and can be used for other purposes such as investment or expansion. Additionally, reduced inventory levels can lead to more efficient production and supply chain processes, further increasing profitability.

Question 16

Which of the following is not included as an inventory holding cost?
A)Annualized cost of materials
B)Handling
C)Insurance
D)Pilferage
E)Storage facilities

Accepted Answer

Annualized cost of materials is not considered as an inventory holding cost as it is the cost of purchasing the materials, and is not related to the costs incurred in holding and managing the inventory. The other options, handling, insurance, pilferage, and storage facilities, are all costs associated with holding inventory.

Question 17

Which of the following is not a reason to carry inventory?
A)To provide a safeguard for variation in raw material delivery time
B)To take advantage of economic purchase-order size
C)To maintain independence of operations
D)To meet variation in product demand
E)To keep the stock out of the hands of competitors

Accepted Answer

Keeping the stock out of the hands of competitors is not a valid reason to carry inventory. The other options are all valid reasons for carrying inventory.

Question 18

When material is ordered from a vendor,which of the following is not a reason for delays in the order arriving on time?
A)Normal variation in shipping time
B)A shortage of material at the vendor's plant causing backlogs
C)An unexpected strike at the vendor's plant
D)A lost order
E)Redundant ordering systems

Accepted Answer

Redundant ordering systems would not cause delays in the order arriving on time. The other options could potentially result in delays.

Question 19

One of the daily,delicate balancing acts that Logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed.

Accepted Answer

Logistics managers have to constantly balance the cost of transportation with the speed of fulfilling orders. Faster methods of transportation are often more expensive, while slower methods may save on cost but may not meet the desired delivery timeline. Finding the right balance is crucial for the success of the logistics operation.

Question 20

You should visualize inventory as stacks of money sitting on forklifts,on shelves,and in trucks and planes while in transit.

Accepted Answer

Visualizing inventory as stacks of money helps to understand its value and the importance of managing it effectively.

Quiz 11: Inventory Management

The costs associated with reduced inventory results in lower profits.

One of the daily,delicate balancing acts that Logistics managers have to perform involves the trade-off between customer satisfaction and cost to serve.

One of the drivers of the direct-to-store (direct distribution)approach is the decrease in trucking industry regulation.

In a price break model of lot sizing the lowest cost quantity is always feasible.

Firms keep supplies of inventory for which of the following reasons?

In a price break model of lot sizing,to find the lowest-cost order quantity,it is sometimes necessary to calculate the economic order quantity for each possible price and to check to see whether the lowest cost quantity is feasible.

One of the drivers of the direct-to-store (direct distribution)approach is the increase in global sourcing.

One of the drivers of the direct-to-store (direct distribution)approach is the upstream migration of value-added logistics services.

Which of the following is not one of the categories of manufacturing inventory?

Which of the following is usually included as an inventory holding cost?

One of the daily,delicate balancing acts that Logistics managers have to perform involves the trade-off between inventory costs and the cost of stock-outs.

The average cost of inventory in the United States is 20 to 25 percent of its value.

When developing inventory cost models,which of the following are not included as costs to place an order?

Which of the following is one of the categories of manufacturing inventory?

Savings from reduced inventory results in increased profit.

Which of the following is not included as an inventory holding cost?

Which of the following is not a reason to carry inventory?

When material is ordered from a vendor,which of the following is not a reason for delays in the order arriving on time?

One of the daily,delicate balancing acts that Logistics managers have to perform involves the trade-off between transportation costs and fulfillment speed.

You should visualize inventory as stacks of money sitting on forklifts,on shelves,and in trucks and planes while in transit.