Deck 8: Quantity and Inventory

Question 1

The following cost is not a carrying,holding,or possession cost:

A)the purchase price of the item.
B)interest on the money invested in inventory.
C)transactional costs of keeping inventory records.
D)cost of obsolete inventory.
E)insurance on inventory.

Answer 1

A

Question 2

On an annual requirement of 100 items spread evenly throughout the year,any purchaser has an opportunity of buying all 100 units at a price of $100 each,or buying 10 units at a time at a price of $150.If the inventory carrying cost is 25 percent per year and assuming no ordering costs:

A)buying 100 at a time will save the company $3,937.50 per year.
B)buying 100 at a time will save the company $4,125 per year.
C)buying 100 at a time will save the company $6,250 per year.
D)buying 10 at a time will save the company $3,875 per year.
E)buying 10 at a time will save the company $5,000 per year.

Answer 2

A

Question 3

"A" items in ABC analysis are:

A)reviewed infrequently.
B)normally carried in large quantities.
C)ordered infrequently.
D)commonly managed by carrying inventory.
E)particularly critical in financial terms.

Answer 3

E

Question 4

A material requirements planning (MRP)system:

A)controls the "A" items.
B)reduces inventory.
C)is easily carried out without technology.
D)requires exploration of the bill of material as the basis of planning.
E)is essential for operating a JIT system.

Question 5

A reduction in set-up costs and time impacts:

A)transit inventories.
B)anticipation inventories.
C)cycle inventories.
D)decoupling inventories.
E)buffer inventories.

Question 6

The demand for a particular service may be:

A)dependent or independent.
B)fixed quantity or fixed period.
C)variable or static.
D)tangible or intangible.
E)continuous,discrete,or periodic.

Question 7

Decoupling inventories are carried:

A)to cover a well-defined future need.
B)to make it possible to carry on activities on each side of a major process linkage point independently of each other.
C)to stock the distribution pipelines.
D)to protect against machine breakdown.
E)to protect against uncertainties in supply and demand.

Question 8

Capacity requirements planning (CRP):

A)uses ABC analysis as an integral part of the process.
B)is essential to minimize in-house inventories.
C)performs for manufacturing resources what MRP does for materials.
D)ignores the human resources required,and focuses on needed machine resources.
E)calculates the service level by dividing average inventory carried by annual sales.

Question 9

Continuous Planning,Forecasting and Replenishment (CPFR)generates the most accurate forecast possible and develops effective replenishment plans by:

A)linking sales and marketing to supply management inside the buying organization.
B)linking sales and marketing processes across supply chain organizations.
C)enabling multiple trading partners to collaborate.
D)linking a supply chain department with sales representatives in a supply chain.
E)enabling supply management to collaborate internally with other functions.

Question 10

When a retailer uses daily sales of each product to identify patterns and to forecast inventory requirements,this is an example of:

A)a time series forecasting technique.
B)a deterministic model.
C)a causal model.
D)a qualitative model.
E)a repetitive pattern technique.