Question 1

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

Accepted Answer

A) True 
 B)False

Question 2

The costs associated with reduced inventory results in lower profits.

Accepted Answer

A) True 
 B)False

Question 3

If the cost to change from producing one product to producing another were zero the lot size would be very small.

Accepted Answer

A) True 
 B)False

Question 4

Safety stock can be defined as the amount of inventory carried in addition to the expected demand.

Accepted Answer

A) True 
 B)False

Question 5

Fixed-order quantity systems assume a random depletion of inventory, with less than an immediate order when a reorder point is reached.

Accepted Answer

A) True 
 B)False

Question 6

Price-break models deal with the fact that the selling price of an item varies with the order size.

Accepted Answer

A) True 
 B)False

Question 7

The average cost of inventory in the United States is 20 to 25 percent of its value.

Accepted Answer

A) True 
 B)False

Question 8

Shortage costs are precise and easy to measure.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is not included as an inventory holding cost?

Accepted Answer

A)  Annualized cost of materials
B)  Handling
C)  Insurance
D)  Pilferage
E)  Storage facilitiesF) A) and D)
G) C) and D)

Question 10

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.

Accepted Answer

A) True 
 B)False

Question 11

Fixed-time period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is usually included as an inventory holding cost?

Accepted Answer

A)  Order placing
B)  Breakage
C)  Typing up an order
D)  Quantity discounts
E)  Annualized cost of materialsF) A) and C)
G) All of the above B

Question 13

Which of the following is a perpetual system for inventory management?

Accepted Answer

A)  Fixed-time period
B)  Fixed-order quantity
C)  P model
D)  First-in-first-out
E)  The wheel of inventoryF) All of the above
G) C) and D)

Question 14

Fixed-time period inventory models are "time triggered."

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is not an assumption of the basic fixed-order quantity inventory model?

Accepted Answer

A)  Ordering or setup costs are constant
B)  Inventory holding cost is based on average inventory
C)  Diminishing returns to scale of holding inventory
D)  Lead time is constant
E)  Demand for the product is uniform throughout the periodF) B) and D)
G) D) and E)

Question 16

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

Accepted Answer

A) True 
 B)False  True

Question 17

Fixed-order quantity inventory models are "event triggered."

Accepted Answer

A) True 
 B)False

Question 18

The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.

Accepted Answer

A) True 
 B)False

Question 19

In inventory models, high holding costs tend to favor high inventory levels.

Accepted Answer

A) True 
 B)False

Question 20

When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time?

Accepted Answer

A)  Normal variation in shipping time
B)  A shortage of material at the vendor's plant causing backlogs
C)  An unexpected strike at the vendor's plant
D)  A lost order
E)  Redundant ordering systemsF) A) and B)
G) C) and D) E

Exam 17: Inventory Control

Cycle counting is a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year.

Correct AnswerverifiedShow Answer

The costs associated with reduced inventory results in lower profits.

Correct AnswerverifiedShow Answer

If the cost to change from producing one product to producing another were zero the lot size would be very small.

Correct AnswerverifiedShow Answer

Safety stock can be defined as the amount of inventory carried in addition to the expected demand.

Correct AnswerverifiedShow Answer

Fixed-order quantity systems assume a random depletion of inventory, with less than an immediate order when a reorder point is reached.

Correct AnswerverifiedShow Answer

Price-break models deal with the fact that the selling price of an item varies with the order size.

Correct AnswerverifiedShow Answer

The average cost of inventory in the United States is 20 to 25 percent of its value.

Correct AnswerverifiedShow Answer

Shortage costs are precise and easy to measure.

Correct AnswerverifiedShow Answer

Which of the following is not included as an inventory holding cost?

Correct AnswerverifiedShow Answer

One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.

Correct AnswerverifiedShow Answer

Fixed-time period inventory models generate order quantities that vary from time period to time period, depending on the usage rate.

Correct AnswerverifiedShow Answer

Which of the following is usually included as an inventory holding cost?

Correct AnswerverifiedB

Which of the following is a perpetual system for inventory management?

Correct AnswerverifiedShow Answer

Fixed-time period inventory models are "time triggered."

Correct AnswerverifiedShow Answer

Which of the following is not an assumption of the basic fixed-order quantity inventory model?

Correct AnswerverifiedShow Answer

The fixed-order quantity inventory model requires more time to maintain because every addition or withdrawal is logged.

Correct AnswerverifiedTrue

Fixed-order quantity inventory models are "event triggered."

Correct AnswerverifiedShow Answer

The fixed-order quantity inventory model is more appropriate for important items such as critical repair parts because there is closer monitoring and therefore quicker response to a potential stockout.

Correct AnswerverifiedShow Answer

In inventory models, high holding costs tend to favor high inventory levels.

Correct AnswerverifiedShow Answer

When material is ordered from a vendor, which of the following is not a reason for delays in the order arriving on time?

Correct AnswerverifiedE

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B

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True

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E