The main inventory costs are:

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

Inventory management deals with finding a trade-off between

Customer service & Operating efficiency & Inventory investments

EOQ defines the order quantity as the order quantity that:

Minimizes the sum of ordering costs and carrying costs

The order point determines

When to reorder in a continuous review system

Work in process inventory is composed of

raw materials entered the manufacturing process but not yet done

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

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

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

The economic order quantity (EOQ)

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

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

Subtracting existing inventory from the target inventory level

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

Accepting discounts when ordering results in

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

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

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

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Recap inventory management

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Questions 28

Answers

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

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