Review systems are used to answer which questions (multiple answers)?

How much to order at one time, When to place an order

The main inventory costs are:

Purchasing, carrying, ordering, stockout, and capacity-associated costs

Accepting discounts when ordering results in

Lower purchase costs, lower ordering costs, and higher inventory costs

In the periodic review system, the quantity reordered is calculated by

Subtracting existing inventory from the target inventory level

ABC analysis is used to answer which questions (multiple answers)?

Which inventory items are most important, How items are to be controlled

The order point determines

When to reorder in a continuous review system

EOQ defines the order quantity as the order quantity that:

Minimizes the sum of ordering costs and carrying costs

Work in process inventory is composed of

raw materials entered the manufacturing process but not yet done

Inventory management deals with finding a trade-off between

Customer service & Operating efficiency & Inventory investments

The economic order quantity (EOQ)

Is used to determine how much to order in continuous review systems

The main difference between continuous (C) and periodic (P) review systems

In P the quantity ordered varies and the time between orders is constant

Account for 30% of the total items

The main difference between continuous (C) and periodic (P) review systems

In C the quantity ordered is the same and the time between orders varies

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Recap inventory management

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Questions 28

Answers

1
One of the assumption of the EOQ is that the demand is constant and known
True
False
2
In the ABC analysis, items are classified based on which law?
Pertico
Parto
Pareto
Peron
3
Review systems are used to answer which questions (multiple answers)?
Which inventory items are most important
How much to order at one time
How items are to be controlled
When to place an order
4
Inventory should be managed separetely from production & distribution
False
True
5
The main inventory costs are:
Purchasing, ordering, stockout, and capacity-associated costs
Purchasing, carrying, ordering, stockout, and capacity-associated costs
Carrying, ordering, stockout, and capacity-associated costs
None of the above
6
Accepting discounts when ordering results in
Lower purchase costs, lower ordering costs, and higher inventory costs
Lower purchase costs, lower ordering costs, and lower inventory costs
Higher purchase costs, lower ordering costs, and lower inventory costs
None of the above
7
Inventory can be classified:
All of the previous one
According to the function they perform
Based on the flow of materials
None of the previous one
8
In the periodic review system, the quantity reordered is calculated by
Is constant and equal to the EOQ
None of the above
Subtracting existing inventory from the target inventory level
Subtracting the target inventory level from existing inventory
9
ABC analysis is used to answer which questions (multiple answers)?
When to place an order
How much to order at one time
Which inventory items are most important
How items are to be controlled
10
The order point determines
How much to reorder in a periodic review system
How much to reorder in a continuous review system
When to reorder in a periodic review system
When to reorder in a continuous review system
11
Safety stocks levels depend on
None of the above
Only on demand variability and reorder frequency
Only on desired service level and lead time
Demand variability, reorder quantity, service level, lead time
12
Stockout can occur when stock is running low
True
False
13
Class A items
Account for 20% of the value
All of the above
Account for 30% of the total items
None of the above
14
There are three main types of review systems
True
False
15
EOQ defines the order quantity as the order quantity that:
Minimizes the sum of ordering costs and carrying costs
Maximize the difference of order costs and carrying costs
None of the above
Minimizes the sum of order costs, carrying costs and transportation costs
16
Work in process inventory is composed of
finished products ready to be sold as completed items
None of the above
purchased items not entered the production process
raw materials entered the manufacturing process but not yet done
17
Total cost varies a lot for a wide range of lot sizes around EOQ
True
False
18
ABC analysis classify items in how many categories?
3
1
4
2
19
Inventory management deals with finding a trade-off between
Customer service & Operating efficiency & Inventory investments
Operating efficiency & Customer service
Customer service & Inventory investments
Customer service & Operating efficiency & Personnel investments
20
Inventory does not involve any big costs
False
True
21
The decision about service level is a senior management decision
False
True
22
The economic order quantity (EOQ)
Is used to determine when to order in continuous review systems
Is used to determine when to order in periodic review systems
Is used to determine how much to order in periodic review systems
Is used to determine how much to order in continuous review systems
23
The main difference between continuous (C) and periodic (P) review systems
In C the quantity ordered and the time between orders are the same
In P the quantity ordered varies and the time between orders is constant
In P the quantity ordered is the same and the time between orders varies
In C the quantity ordered is the same and also the time between orders
24
Safety stock is intended to protect against uncertainty in supply and demand due to
Timing uncertainty
Quantity uncertainty
None of the above
All of the above
25
Class B items
Account for 30% of the total items
Account for 15% of the value
None of the above
All of the above
26
The main difference between continuous (C) and periodic (P) review systems
In C the quantity ordered is the same and the time between orders varies
In P the quantity ordered and the time between orders vary
In P the quantity ordered is the same and the time between orders varies
In C the quantity ordered and the time between orders are the same
27
The basic purpose of inventories is to decouple supply and demand (so inventory serves as a buffer)
True
False
28
In case of a predictable, stable, and relatively constant demand, do you need a lot of inventory
False
True

Recap inventory management Flashcards | StudBud