Question 1

Mass distributors lowered prices substantially to sell increased volumes of hardware products, and hardware stores managed the____________  costs of maintaining larger than needed inventories by including them as overhead.

Accepted Answer

Holding costs are the costs of keeping inventory. They include storage costs, insurance, taxes, obsolescence, and opportunity costs.

Question 2

In inventory management situations involving independent demand systems,should be used, whereas with dependent demand systems,________ Should be used.

Accepted Answer

In independent demand systems, EOQ (Economic Order Quantity) is used to manage inventory efficiently. In dependent demand systems, JIT (Just-In-Time) and/or MRP (Material Requirements Planning) are used to coordinate production and inventory levels.

Question 3

Transaction costs and loss of customer goodwill are both examples of ____________ .

Accepted Answer

Stockout costs are the costs incurred when a company runs out of product, including
transaction costs to replace inventory and the loss of customers' goodwill.

Question 4

RIP
In recent years, Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony began turning to Americans to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out high- quality consumer electronics products such as camcorders and TVs by the millions, it's a different story in industries with short product cycles, which require factories that must build what customers order instead of churning out products in anticipation of demand. Japan's great strength, repetitive manufacturing, is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead the American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand.
-Refer to RIP. In terms of the characteristics of quality service, repetitive Japanese manufacturing means many of the Japanese firms are weak in which of the following areas?

Accepted Answer

Responsiveness is the promptness and willingness with which service providers give good service.

Question 5

Which of the following is NOT a well-known technique for managing inventory?

Accepted Answer

Progressive inventory management (PIM) is not a well-known technique for managing inventory. It is not commonly used in industry and is not typically taught in supply chain management courses. JIT, MRP, EOQ, and kanban are all widely recognized and utilized methods for managing inventory.

Question 6

________ is a ticket-based system that indicates when to reorder inventory.

Accepted Answer

A ticket-based system that indicates when to reorder inventory is a characteristic of the Kanban system. In Kanban, inventory levels are controlled by setting a limit on the number of parts that can be in inventory at any one time, and using a signal, such as a card or ticket, to trigger a reorder when inventory falls below a certain level. This helps to ensure that only the necessary amount of inventory is kept on hand, reducing waste and improving efficiency.

Question 7

____________ is the number of times per year that a company sells or replaces its average inventory.

Accepted Answer

Inventory turnover is the number of times per year a company sells or replaces its average inventory. It is calculated by dividing the cost of goods sold by the average inventory value. This ratio helps companies to assess their inventory management efficiency and effectiveness.

Question 8

RIP
In recent years, Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony began turning to Americans to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out high- quality consumer electronics products such as camcorders and TVs by the millions, it's a different story in industries with short product cycles, which require factories that must build what customers order instead of churning out products in anticipation of demand. Japan's great strength, repetitive manufacturing, is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead the American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand.
-Refer to RIP. A company that builds what customers order rather than what it thinks customers should buy has a strong_______  .

Accepted Answer

Customer focus is an organizational goal to concentrate on meeting customers' needs at all
levels of the organization.

Question 9

Which of the following is NOT a kind of cost associated with maintaining an inventory?

Accepted Answer

Ordering costs, stockout costs, holding costs, and setup costs are all associated with maintaining an inventory. Amortization, on the other hand, refers to the process of spreading the cost of an asset over its useful life, and is not directly related to maintaining an inventory.

Question 10

According to the textbook, what should a business owner do with excess inventory?

Accepted Answer

She needs to increase her inventory turnover. In general, the higher the number of inventory turns, the better.

Question 11

RIP
In recent years, Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony began turning to Americans to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out high- quality consumer electronics products such as camcorders and TVs by the millions, it's a different story in industries with short product cycles, which require factories that must build what customers order instead of churning out products in anticipation of demand. Japan's great strength, repetitive manufacturing, is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead the American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand.
-Refer to RIP. What type of manufacturing operation are Americans who manufacture NEC, Fujitsu, and Sony products using?

Accepted Answer

Make-to-order is a manufacturing operation that does not start assembling products until a customer order is received.

Question 12

Pamela makes cloth dolls, which she sells to friends and relatives. Her total inventory includes over 200 yards of fabric, 100 yards of ribbon, a box of 500 eyes, stuffing, 20 dolls in various stages of completion, and 15 completed dolls. How many items are in Katian's finished goods inventory?

Accepted Answer

Finished goods inventory refers to the final outputs of the manufacturing operations.

Question 13

The three basic measures of inventory are inventory turnover, average aggregate inventory, and____________  .

Accepted Answer

The three basic measures of inventory are inventory turnover, average aggregate inventory, and weeks of supply. Inventory turnover measures how many times inventory is sold and replaced in a given period, while average aggregate inventory measures the average amount of inventory held during a given period. Weeks of supply is another measure that calculates the number of weeks it would take to sell out of the current inventory, based on the average sales during a given period. Therefore, the correct answer is C, weeks of supply.

Question 14

Which of the following is NOT a kind of inventory a manufacturer would keep in stock?

Accepted Answer

Nonrenewable materials are not typically kept in stock by manufacturers as they are finite resources that cannot be replenished. Raw materials, component parts, work-in-process, and finished goods are all commonly kept in inventory by manufacturers.

Question 15

Materials requirement planning (MRP) is________ .

Accepted Answer

MRP is used with dependent demand systems, where the demand for one item is directly influenced by the demand for another item (e.g. the demand for bicycle wheels is dependent on the demand for bicycles). MRP uses a bill of materials and a master production schedule to determine the materials needed for production and when they should be ordered.

Question 16

The three key parts of material requirement planning (MRP) are________  .

Accepted Answer

The three key parts of material requirement planning (MRP) are the master production schedule (MPS), the bill of materials (BOM), and inventory records. The MPS outlines the production schedule, the BOM lists all the components and raw materials needed to produce the final product, and the inventory records track the status and availability of all materials and finished products. Together, these three elements form the foundation for effective MRP.

Question 17

Companies relying on a trucking company providing just-in-time (JIT) transportation would ____________ ?

Accepted Answer

JIT is an inventory system in which component parts arrive from suppliers just as they are needed at each stage of production.

Question 18

Downtime and lost efficiency are both examples of ____________ .

Accepted Answer

Setup cost is the cost of changing or adjusting a machine so that it can produce a different kind of inventory.

Question 19

A company decided to reduce its inventory by lowering their prices. The plan to get rid of excessive inventory was so successful that the company found itself completely sold out in just a couple of days. In other words, The company experienced____________  .

Accepted Answer

A stockout occurs when a company runs out of finished product.

Question 20

A company that embroiders t-shirts, uses 15,000 plain t-shirts annually. The optimal order quantity is 500 shirts. The company embroiders approximately 150 shirts daily. Using the ____________ calculations, the company knows it should place an order approximately every 3 days.

Accepted Answer

EOQ is a system of formulas that minimize ordering and holding costs and help determine how much and how often inventory should be ordered.

Quiz 17: Section 1: Managing Information

Mass distributors lowered prices substantially to sell increased volumes of hardware products, and hardware stores managed the____________ costs of maintaining larger than needed inventories by including them as overhead.