Question 1

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

Accepted Answer

As companies source products from different countries around the world, they may choose to use direct distribution to ensure efficient delivery and management of inventory in their stores.

Question 2

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 distribution is increasingly popular because of the growing trend towards value-added logistics services being offered closer to the point of consumption or sale. This has led to a shift away from traditional wholesale and distribution models, and towards a direct-to-store approach.

Question 3

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 often have to consider the cost of transportation versus the speed of fulfillment when making decisions, which requires a delicate balancing act between the two factors.

Question 4

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)Reorder point

Accepted Answer

Work-in-process inventory is one of the categories of manufacturing inventory. This refers to the inventory that is currently in the process of being transformed into a finished product but is not yet completed.

Question 5

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

Accepted Answer

The direct-to-store approach is driven by factors such as the need for faster delivery, reduced handling costs, and improved inventory management, rather than changes in trucking industry regulation.

Question 6

The costs associated with reduced inventory results in lower profits.

Accepted Answer

Reducing inventory can lower holding costs and increase efficiency, potentially leading to higher profits.

Question 7

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, the economic order quantity may need to be calculated for each possible price in order to determine the quantity that results in the lowest total cost, and it may be necessary to check if this quantity is feasible given production and inventory constraints.

Question 8

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

Inventory holding costs typically include the cost of storing inventory, which includes expenses such as breakage, theft, obsolescence, and depreciation. Order placing, typing up an order, and quantity discounts are usually considered ordering costs, while the annualized cost of materials is a direct cost of goods sold.

Question 9

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 10

Savings from reduced inventory results in increased profit.

Accepted Answer

Reducing inventory levels can result in lower storage costs, reduced spoilage, and increased efficiency in production, which can ultimately lead to higher profits for a business.

Question 11

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

The need to keep stock out of the hands of competitors is not a valid reason to carry inventory. The other reasons listed are all valid reasons to hold inventory.

Question 12

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 can help people understand the financial impact of maintaining inventory levels and the potential risks of overstocking or understocking.

Question 13

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 be a reason for delays in the order arriving on time, as they are in place to prevent delays and ensure sufficient inventory levels. The other options all involve issues that could cause delays in the order arriving on time.

Question 14

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 the cost of carrying inventory with the costs of stock-outs. Too much inventory can lead to high carrying costs, while too little inventory can result in stock-outs and lost sales. Finding the right balance involves managing demand forecasting, order quantities, lead times, and safety stock levels.

Question 15

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 production strategy that involves receiving materials and producing products only as they are needed, rather than maintaining inventory. Therefore, it is not a category of manufacturing inventory.

Question 16

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 17

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 need to balance the satisfaction of their customers with the cost of providing that satisfaction. They may have to provide faster delivery times, more frequent deliveries, or other value-added services that can come at a higher cost. However, they also have to control costs to ensure profitability for their company. Therefore, they need to strike a balance between these two factors.

Question 18

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. In case there is unexpected demand surge or supply chain disruption, having inventory on hand can help the firm continue production without disruption. However, the other choices are not typically reasons for keeping inventory.

Question 19

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 an inventory holding cost as it is a direct cost of the product and is already factored into the cost of goods sold. Inventory holding costs typically include handling, insurance, pilferage, and storage facilities.

Question 20

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

Accepted Answer

Taxes are not considered a cost to place an order as they are typically factored into the cost of goods or are paid separately outside of the ordering process. The other options listed (phone calls, clerical work, calculating quantity to order, and postage) are all typical costs associated with placing an order for inventory.

Quiz 20: Inventory Management

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.

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

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

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

The costs associated with reduced inventory results in lower profits.

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.

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

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

Savings from reduced inventory results in increased profit.

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

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

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 inventory costs and the cost of stock-outs.

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

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

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

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

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

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