ISDS 3115 Chapter 12 Concept Questions

One use of inventory is: A) to ensure that item cost is maximized B) to tightly synchronize a firm's production with its customers' demand C) to tightly synchronize production and distribution processes D) to provide a hedge against inflation

The objective of inventory management is to: A) strike a balance between inventory investment and customer service B) take advantage of quantity discounts C) decouple various parts of the production process D) provide a selection of goods for anticipated customer demand

Which of the following is NOT a type of inventory? A) raw material B) MRP C) finished goods D) work-in-process

Which of the following types of inventory describes inventory that has been purchased but not processed? A) finished-goods inventory B) raw material inventory C)maintenance/repair/operating supply inventory D) work-in-process inventory

ABC analysis divides an organization's on-hand inventory into three classes based upon: A) unit price B) annual dollar volume C) annual demand D) the number of units on hand

Policies based on ABC analysis might include investing: A) more in inventory security for C items B) extra care in forecasting C items C) more in supplier development for A items D) the most time and effort verifying the accuracy of records for B items

Which of the following does NOT belong to ordering costs? A) order processing B) cost of supplies C) interest payments D) clerical support

Which of the following does NOT belong to holding costs? A) order processing B) storage costs C) pilferage, scrap, and obsolescence D) insurance on inventory

What is the cost to prepare a machines or process for production? A) ordering cost B) setup cost C) preparation cost D) holding cost

Inventory control models assume that demand for an item is A) identical to the demand for other items B) always independent of the demand for other items C) either independent of or dependent on the demand for other items D) always 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) single-period inventory model B) production order quantity model C) ROP D) EOQ

A single-period inventory model is NOT applicable for: A) furniture B) newspapers C) milk D) seasonal goods

A system that triggers ordering on a uniform time basis is called: A) a fixed-period system B) a reorder point system C) a fixed-quantity system D) an EOQ system

A system that keeps track of each withdrawal or addition to inventory continuously is A) a perpetual inventory system B) a constant monitoring system C) a fixed period system D) a continuous inventory system

Which of the following statements is NOT true about a fixed-period system? A) the disadvantage of the fixed-period system is that because there is no tally of inventory during the review period, there is the possibility of a stockout during this time B) the advantage of the fixed-period system is that there is no physical count of inventory items after an item is withdrawn C) a fixed-period system is also called "continuous review" D) a fixed-period system is appropriate when vendors make routine visits to customers to take fresh orders or when purchasers want to combine orders to save ordering and transportation costs

Which of the following is NOT one of the assumptions of fixed-period systems? A) the only relevant costs are the ordering and holding costs B) lead times are variable C) items are independent of one another D) lead times are known