Question 1

Which of the following options is NOT a reason why an inventory must be carried?

Accepted Answer

A)  To manage unexpected fluctuations in demand 
B)  To take advantage of bulk purchasing discounts 
C)  In case of emergency shortage situations 
D)  To allow stock to be easily counted 
A)  To manage unexpected fluctuations in demand 
B)  To take advantage of bulk purchasing discounts 
C)  In case of emergency shortage situations 
D)  To allow stock to be easily counted D

Question 2

Which factor is given by the equation ?

Accepted Answer

A)  Length of inventory cycle 
B)  Economic Ordering Quantity 
C)  Economic Batch Quantity 
D)  Average inventory level 
A)  Length of inventory cycle 
B)  Economic Ordering Quantity 
C)  Economic Batch Quantity 
D)  Average inventory level D

Question 3

A Jordanian company has to meet a regular demand of 6000 units per year. Each time they place an order for 450 units of stock it costs JOD 20 (Jordanian Dinar) and it costs JOD 0.10 to hold a unit of stock for a year. Using the basic model, calculate the total inventory cost for a year (to nearest whole JOD)

Accepted Answer

A)  JOD 276 
B)  JOD 281 
C)  JOD 289 
D)  JOD 293 
A)  JOD 276 
B)  JOD 281 
C)  JOD 289 
D)  JOD 293 C

Question 4

Which option is NOT a cost associated with inventories?

Accepted Answer

A)  Stockout costs 
B)  Overhead costs 
C)  Replenishment costs 
D)  Holding costs 
A)  Stockout costs 
B)  Overhead costs 
C)  Replenishment costs 
D)  Holding costs

Question 5

Calculate the Economic Batch Quantity (EBQ) for a company with annual demand of 4,000 units; a production rate of 5,500 units per year; a production run setup cost of €20 and a holding cost of €0.1 per year (0 decimal places).

Accepted Answer

A)  2286 
B)  2346 
C)  2393 
D)  2422 
A)  2286 
B)  2346 
C)  2393 
D)  2422

Question 6

What name is given to the external order quantity that minimises inventory costs?

Accepted Answer

A)  Economic Ordering Quantity 
B)  Efficient Quantity 
C)  Economic Batch Quantity 
D)  Optimum Quantity 
A)  Economic Ordering Quantity 
B)  Efficient Quantity 
C)  Economic Batch Quantity 
D)  Optimum Quantity

Question 7

What is the Economic Ordering Quantity (EOQ) for a company with annual demand of 5,000 units, an order cost of $35 and a holding cost of $0.25 (to nearest whole number).

Accepted Answer

A)  110 
B)  115 
C)  120 
D)  125 
A)  110 
B)  115 
C)  120 
D)  125

Question 8

A factory in Syria has the following information: reorder level 1,600 units; EQQ 32,000 units; minimum usage 600 units; minimum lead time 3 weeks. Calculate the maximum inventory level LMax.

Accepted Answer

A)  32,000 
B)  31,800 
C)  31,600 
D)  31,400 
A)  32,000 
B)  31,800 
C)  31,600 
D)  31,400

Question 9

Which of the following options is the BEST definition of Safety Stock?

Accepted Answer

A)  A level of stock that is used to sign the need to replenish stock 
B)  A level of stock above which stocks are too high 
C)  A level of stock kept to cover fluctuations in demand during lead time 
D)  An amount by which stock levels are increased during replenishment 
A)  A level of stock that is used to sign the need to replenish stock 
B)  A level of stock above which stocks are too high 
C)  A level of stock kept to cover fluctuations in demand during lead time 
D)  An amount by which stock levels are increased during replenishment

Question 10

A company knows that its EOQ is 180 units, that its holding cost is AED 2 and that the order cost is AED 90. Calculate the annual demand for its product.

Accepted Answer

A)  340 
B)  360 
C)  380 
D)  400 
A)  340 
B)  360 
C)  380 
D)  400

Exam 37: Inventory Control

Which of the following options is NOT a reason why an inventory must be carried?

Which factor is given by the equation ?

Which option is NOT a cost associated with inventories?

Calculate the Economic Batch Quantity (EBQ) for a company with annual demand of 4,000 units; a production rate of 5,500 units per year; a production run setup cost of €20 and a holding cost of €0.1 per year (0 decimal places).

What name is given to the external order quantity that minimises inventory costs?

What is the Economic Ordering Quantity (EOQ) for a company with annual demand of 5,000 units, an order cost of $35 and a holding cost of $0.25 (to nearest whole number).

A factory in Syria has the following information: reorder level 1,600 units; EQQ 32,000 units; minimum usage 600 units; minimum lead time 3 weeks. Calculate the maximum inventory level LMax.

Which of the following options is the BEST definition of Safety Stock?

A company knows that its EOQ is 180 units, that its holding cost is AED 2 and that the order cost is AED 90. Calculate the annual demand for its product.

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A factory in Syria has the following information: reorder level 1,600 units; EQQ 32,000 units; minimum usage 600 units; minimum lead time 3 weeks. Calculate the maximum inventory level L_Max.