Deck 9: Managing Inventory in the Supply Chain

Question 1

Many companies can make a case for using a formal logistics organization to help resolve inventory objective conflicts.

Answer 1

True

Question 2

"Batching stocks" and "cycle stocks" are the same.

Answer 2

True

Question 3

MRPII will not allow an organization to integrate financial planning and operations/logistics.

Answer 3

False

Question 4

EOQ can only be used for "push" inventory.

Question 5

Storage costs are not variable.

Question 6

Capital cost is also called interest or opportunity cost.

Question 7

Ordering cost refers to the expense of placing an order for additional inventory and does not include the cost or expense of the product itself.

Question 8

JIT is often used to force inventory back up the pipeline and therefore does not reduce inventory.

Question 9

Inventory and the GDP grew at the same rate from 1990 through 2006.

Question 10

Setting safety stock levels for an organization is now a science.

Question 11

The reorder point depends on the orders in house at that time.

Question 12

JIT was developed in the U.S.and copied by the Japanese.

Question 13

Purchase economies and transportation economies are not complementary.

Question 14

In comparison with the basic EOQ approach,the fixed interval model does not require close surveillance of inventory levels.

Question 15

Most organizations would not operate under conditions of certainty for a variety of reasons.

Question 16

Inventory plays a dual role in organizations.Inventory impacts the cost of goods sold as well as supporting the balance sheet,a new concept only recently receiving attention.

Question 17

JIT,MRP,MRP II,and DRP,incorporate some version of the basic EOQ model into their philosophies.

Question 18

MRP has been known for some time but lacked interest until recently.

Question 19

Inventory management is not as important as it has been due to other factors coming into play.

Question 20

A reason to hold inventory arises when an organization anticipates that an unusual event might occur that will negatively impact its source of supply.

Question 21

Batching economies or cycle stocks usually arise from three sources.Which one does not belong?

A) procurement
B) transportation
C) production
D) demand

Question 22

Discuss how logistics interfaces with finance,marketing and manufacturing from an inventory standpoint.

Question 23

What are push and pull systems,and name at least one inventory management system that is a push or pull system.

Question 24

A DRP system is usually coupled with a ____ system in an attempt to manage the flow and timing of both inbound materials and outbound finished goods.

A) Kan Ban
B) VMI/ Consignment
C) MRP
D) JIP

Question 25

The ABC analysis is based on Pareto's Law.

Question 26

Inventory as an asset on the balance sheet and a ____ on the income statement.

A) liability
B) footnote
C) statement
D) variable expense

Question 27

Seasonal stocks are not influenced by

A) EOQ.
B) weather.
C) transportation.
D) seasonality.

Question 28

Capital cost can focuses on the cost capital tied up in ____ and the resulting lost opportunity from investing elsewhere.

A) plants
B) inventory
C) distribution centers
D) WIP

Question 29

Ordering cost refers to the expense of placing an order and

A) includes the cost of capital.
B) relates to the material management concept.
C) does not include the price of the product.
D) not receiving it.

Question 30

Which department does not have any impact on inventory?

A) finance
B) manufacturing
C) corporate governance
D) marketing

Question 31

Dependent demand relates to

A) the amount of goods requested.
B) the spare parts needed to fill the order.
C) VMI inventories.
D) the cost of capital for the firm.

Question 32

JIT is a ____ system.

A) Kan Ban
B) Pareto's Law
C) MRP
D) pull

Question 33

Discuss dependent versus independent demand as it is related to inventory.

Question 34

Inventory and the GDP grew by ____ amounts between 1990 and 2006.

A) the same
B) different
C) inversely proportional
D) exponential

Question 35

Discuss how seasonality can affect inventory.

Question 36

WIP inventories are

A) not included on the balance sheet.
B) are associated with manufacturing.
C) are the same as VMI inventories.
D) are not impacted by EOQ.

Question 37

Define and discuss the JIT system,and include the four elements necessary for it to be successful.

Question 38

In the event of a "stock out" one of the things that could happen is

A) the vendor's plant shuts down.
B) the cost of capital is increased.
C) the SCOR process would come into play.
D) extra freight cost may be incurred.

Question 39

Discuss capital cost and include both the hurdle rate and WACC in your answer.

Question 40

Batching economies or cycle stocks usually arise from three sources.Name them,and discuss one of them in detail

Question 41

When a seller is unable to satisfy demand with available inventory,one of four possible events might occur.Name all four,and pick two to discuss in detail.

Question 42

Define and discuss MRP.