ISDS 3115 Ch 12: Inventory Management Conceptual

One use of inventory is

a. to provide a hedge against inflation
b. to tightly synchronize production and distribution processes
c. to tightly synchronize a firm’s production with its customer’s demand
d. to ensure that item cost is maximized

a. to provide a hedge against inflation
The objective of inventory management is to

a. take advantage of quantity discounts
b. decouple various parts of the production process
c. provide a selection of goods for anticipated customer demand
d. strike a balance between inventory investment and customer service

d. strike a balance between inventory investment and customer service
Which of the following is NOT a type of INVENTORY?

a. work-in-process
b. raw material
c. MRP
d. finished goods

c. MRP
Which of the following types of inventory describes inventory that has been purchased but not processed?

a. maintenance/repair/operating supply inventory
b. finished-good inventory
c. raw material inventory
d. work-in-process inventory

c. raw material inventory
ABS analysis divides and organization’s on-hand inventory into three classes based upon

a. unit price
b. annual demand
c. the number of units on hand
d. annual dollar volume

d. annual dollar volume
Policies based on ABC analysis might include investing
a. more in supplier development for A items

b. extra care in forecasting for C items
c. the most time and effort verifying the accuracy of record for B items
d. more inventory security for C items

a. more in supplier development for A items
Which of the following does NOT belong to ORDERING COSTS?

a. cost of supplies
b. clerical support
c. order processing
d. interest payments

d. interest payments
Which of the following does NOT belong to HOLDING COSTS?

a. storage costs
b. pilferage, scrap, and obsolescence
c. order processing
d. insurance on inventory

c. order processing
What is the cost to prepare a machine or process for production?

a. setup cost
b. holding cost
c. ordering cost
d. preparation cost

a. setup cost
Inventory control models assume that demand for an item is

a. either independent of or dependent on the demand for other items
b. identical to the demand for other items
c. always independent on the demand for other items
d. always dependent on the demand for other items

a. either independent of or dependent on the demand for other items
What is a system for ordering items that have little or no value at the end of a sales period?

a. production order quantity model
b. EOQ
c. single-period inventory model
d. ROP

c. single-period inventory model
A single-period inventory model is NOT applicable for
a. milk
b. furniture
c. seasonal goods
d. newspapers
b. furniture
A system that triggers ordering on a uniform time basis is called

a. an EOQ system
b. a fixed-period system
c. a reorder point system
d. a fixed-quantity system

b. a fixed-period system
A system that keeps track of each withdrawal or addition to inventory continuously is

a. a fixed period system
b. a perpetual inventory system
c. a constant monitoring system
d. a continuous inventory system

b. a perpetual inventory system
Which of the following is NOT true about a FIXED-PERIOD SYSTEM?
A fixed- period system is also called “continuous review”
Which of the following is NOT one of the assumptions of fixed-period systems?

a. lead times are known
b. lead times are variable
c. Items are independent of one another
d. The only relevant costs are the ordering and holding costs

lead times are variable