INVENTORY QUESTIONS
A buyer has notified the material planner that a purchase order required in period 2 will not be received until period 3. What is the first action the planner should take? A. Check to see if safety stock will cover the requirement in period 2. B. Check to see which parent orders will be adversely affected by the delay. C. Determine if the buyer can expedite the order. D. Determine which parent orders can be rescheduled from period 2 to period 3.
A. Check to see if safety stock will cover the requirement in period 2. Safety stock is used to cover supply variability and so should be checked first.
Which inventory valuation method will cause asset values to most closely resemble current market value during a period of inflation? A. FIFO B. Average C. Standard D. LIFO
A. FIFO The FIFO method assumes that the oldest inventory (first in) is the first to be used (first out). In inflationary times, this means the value of inventory will increase as lower priced items are used and as higher priced items are received into inventory. Therefore, inventory assets will be valued at a price closer to the market value. The opposite would be true of the LIFO method. Standard and Average are cost accounting systems, but they do not address the relative age of inventory.
A company has a historical 2% failure rate at final test. The failed units cannot be reworked. Which of the following information should be used in material planning? A. Scrap is 2% and is accounted for as an addition to the order quantity. B. Yield is 2% and is accounted for as an inventory master field. C. Safety stock of 2% should be statistically calculated for each part. D. Yield and scrap are basically irrelevant with a stocked item.
A. Scrap is 2% and is accounted for as an addition to the order quantity. Scrap is "material outside of specifications and possessing characteristics that make rework impractical" (Dictionary). The scrap (failure) rate of this process is 2%, which needs to be factored into the bill of material for this item. If this is done correctly, there would be additional material added to the work order to account for the anticipated scrap.
A company is determining how much floor space will be required for a new distribution warehouse. The plan is to store 15,000 cartons stacked on pallets three high. Each pallet will contain approximately 40 cartons. How many pallet positions will be required for the warehouse? A. 120 positions B. 125 positions C. 375 positions D 5,000 positions
B. 125 positions 15,000 cartons divided by 40 per pallet divided by 3 high equals 125 positions.
A company had a cost of goods sold of $500,000 and net sales of $800,000 in one year. Beginning inventory was valued at $50,000 and ending inventory at $60,000. What was the inventory turnover for the year? A. 8 times B. 9 times C. 10 times D. 14 times
B. 9 times Average inventory = ($50,000 + $60,000)/2 = $55,000 $500,000/$55,000 = 9 times per year
For which of the following situations would the periodic review system be most appropriate? A. A variety of goods in a distribution center that are purchased from the manufacturers B. A variety of goods in a retail store that are supplied by a single distributor C. Work-in-process that is controlled by a pull production system D. A component that is purchased directly from the manufacturer by an assembler
B. A variety of goods in a retail store that are supplied by a single distributor A periodic review system is a form of independent demand management in which inventory levels are reviewed and an order is placed at specific intervals. Order quantities may vary but typically replace items consumed during the time period. The periodic review system is advantageous in retail settings stocked with many different items from a central location, because it consolidates deliveries and reduces shipping and handling costs.
What is the purpose of having inventory at a distribution center? A. To decrease transportation costs B. To improve customer service C. To decrease safety stock D. To increase sustainability
B. To improve customer service Keeping inventory closer to the customer improves customer service.
If the annual demand is 50,000 units, the ordering cost is $100 per order, the carrying cost is 20%, and the unit cost is $5, what is the annual ordering cost for an order quantity of 2,500? A. 100 B. 500 C. 2,000 D. 2,500
C. 2,000 (50,000/2,500) x 100 = 2,000
Using a 365-day year, what is the average age of the inventory if the cost of goods sold is $100,000 and the average inventory is $55,000? A. 0.55 B. 150.7 C. 202 D. 663
C. 202 The average age of the inventory is calculated by dividing 365 by the inventory turns: 365/1.8 = 202.
Which of the following is an advantage of overforecasting a new assemble-to-order product during the growth phase as it relates to raw material inventory? A. Raw materials are purchased only when actual customer orders offset forecasts. B. The planner is assured that any raw material excess will be used eventually. C. There is no relationship between forecasting at the sales and operations level and raw materials. D. Overforecasting improves customer service by increasing part availability.
D. Overforecasting improves customer service by increasing part availability. The growth phase may result in levels that are too low, so excess raw material buffers against that.
Which example is the most sustainable according to the waste hierarchy? A. Disposing of both recyclable and non-recyclable plastic rather than wasting energy cleaning them B. Sending batteries to a processing center that specializes in disposal of batteries C. Burning waste oil in an incinerator that produces electricity D. Sending recyclable plastics to a recycling center and responsibly disposing of non-recyclable plastics
D. Sending recyclable plastics to a recycling center and responsibly disposing of non-recyclable plastics Recycling is higher on the waste hierarchy than recovery or disposal.
Which of the following accounting methods results in no change in inventory value regardless of whether material costs are increasing or decreasing? A. Actual B. Average C. Process D. Standard
D. Standard The standard method results in no change in inventory value regardless of whether material costs are increasing or decreasing. The other options increase or decrease with material cost changes.
A company has made process improvements that have reduced shift lengths from ten to eight hours while maintaining production rates and material delivery schedules. What is the general effect on the level of raw material? A. It is increased by 20%. B. It is reduced by 20%. C. It is reduced by 25%. D. There is no change.
D. There is no change. The daily production rate and material delivery schedules are the same, so levels will not change.
Which functional role is most likely to oppose increasing multiple work-in-process (WIP) buffer sizes after a series of missed customer orders? A. Finance B. Marketing C. Operations D. No one
A. Finance The goals of finance are to increase profit and cash flow and reduce investment. Increasing WIP buffer sizes will likely increase inventory investment.
What inventory valuation method would be used to decrease taxes and increase cash flow during an inflationary period? A. Last in, first out (LIFO) B. First in, first out (FIFO) C. Moving average cost D. Standard cost
A. Last in, first out (LIFO) Inventory that costs more is issued first, meaning that taxes are paid on inventory with less cost and cash flow is increased.
Which of the following situations is a result of anticipation inventory? A. Lower overtime costs B. Lower inventory carrying costs C. Higher required capacity D. Higher subcontracting costs
A. Lower overtime costs Building up inventory in advance of an anticipated need would lower the need for overtime, subcontracting, and additional capacity later. It would also raise inventory costs.
Which inventory transaction type is most likely found in an environment that produces to a forecast as opposed to an environment that produces to a customer order? A. Work in process B. Finished goods C. Service parts D. Raw materials
B. Finished goods Make-to-stock environments must receive, issue, and adjust finished goods inventory that has been produced mainly to a forecast.
Which of the following production order transactions is used to update item information? A. Parts started B. Scrap quantity C. Order complete D. Work center hours
B. Scrap quantity Scrap is updated so material requirements planning can incorporate actual historical scrap values into the order quantity.
Which accounting method assumes that the oldest inventory is the first to be used? A. Absorption B. GAAP C. FIFO D. LIFO
C. FIFO FIFO is a method of inventory valuation for accounting purposes that assumes that the oldest inventory (first in) is the first to be used (first out).
A company is required to provide lot traceability for all of its products. This means that the company must be able to: A. show exactly where each lot is stored in the warehouse. B. track every step of the process through the manufacturing facility. C. track every step of the process from supplier to customer. D. provide a listing of all raw materials used in the product.
C. track every step of the process from supplier to customer. Lot traceability is the ability to identify the lot or batch number of products in terms of one or all of the following: its composition, purchased parts, manufacturing date, shipped items.
Even though lot-for-lot ordering will minimize the amount of inventory at the distribution center, it will most likely increase stockouts, decrease customer service, and increase transportation costs due to more shipments coming from the supply warehouse. A. Transportation costs will be reduced. B. Stockouts will be reduced. C. The company's bottom line will improve. D. Demand on the supplying warehouse will be erratic.
D. Demand on the supplying warehouse will be erratic. Even though lot-for-lot ordering will minimize the amount of inventory at the distribution center, it will most likely increase stockouts, decrease customer service, and increase transportation costs due to more shipments coming from the supply warehouse.
Which of the following is the most necessary component of an efficient backflushing system? A. Accurate forecasts B. Accurate inventory lead times C. Regular sales and operations planning meetings D. Accurate bill of material
D. Accurate bill of material Backflushing requires very accurate bills of material because when work is completed, the system removes the number of parts that should have been used by the number of units produced. For example, say that a table requires one tabletop, four leg assemblies, and 28 hardware packets and 100 tables are produced in a batch. Upon completion of production, 100 tabletops, 400 hundred leg assemblies, and 2,800 hardware packets will be removed from inventory. Inaccurate bills of material will create inventory inaccuracies.
An organization is trying to forecast how many units of replacement part XYZ to produce in the upcoming period. The part is in fairly high demand and requires a long lead time to produce. What information could help the most with this forecast? A. Mean time to repair (MTTR) B. Mean time to failure (MTTF) C. Mean absolute deviation (MAD) D. Mean time between failures (MTBF)
D. Mean time between failures (MTBF) The APICS Dictionary, 16th edition, defines MTBF as "the average time interval between failures for repairable product for a defined unit of measure (e.g., operating hours, cycles, miles)." MTBF can be used to generate repair part forecasts for items with sufficient demand and long lead times.
Maintaining physical control of point-of-use is accomplished by: A. procedures. B. cycle counting. C. limited access. D. receipt and issue transactions.
A. procedures. Procedures limit the input and control the output based on demand.
A frozen foods manufacturer and distributor has a well-developed cold chain. If the organization is considering becoming a distributor for certain pharmaceuticals that are not considered controlled substances, what does it need to consider? A. Ability to create chain-of-custody data that are difficult to counterfeit B. Ability to provide a temperature-controlled environment for source, make, and deliver C. Ability to trace to the class level rather than just the batch level D. Ability to succeed in unrelated diversification in the manufacturing area
A. Ability to create chain-of-custody data that are difficult to counterfeit Traceability requirements have become stricter in recent years, in part because of concerns about counterfeit and adulterated drugs in the pharmaceutical industry. Therefore, not only does the organization need a system that provides traceability, but that system needs to be secure.
Which of the following inventory accounting methods would indicate the lowest inventory value on the balance sheet in times of steadily rising prices? A. Last in, first out (LIFO) B. First in, first out (FIFO) C. Standard cost D. Average cost
A. Last in, first out (LIFO) The LIFO method assumes that the newest (last in) item in stock is the first sold. In times of rising prices, replacement is at the current price, and this current price is higher than the accounted-for cost for the inventory that did not sell. In a falling price market, existing inventory is overvalued.
Why is it important for an organization to consider setting waste hierarchy policies for its suppliers? A. Reputation risk B. Liability risk C. Regulatory compliance risk D. It is worth the added expense.
A. Reputation risk Setting policies for suppliers related to the waste hierarchy is important because the organization can be held responsible for its supply chain partners' activities in terms of public opinion. Enforcement of efficiency-related policies can also help drive unnecessary costs out of the supply chain. Liability and regulatory compliance are risks for the supplier, not the buyer.
Which of the following most likely indicates that there are two packing slip errors? A. The part number does not match the actual material received. B. The unit price does not match the standard cost on file. C. The quantity does not match the actual quantity received. D. The unit of measure does not match the inventory unit of measure.
A. The part number does not match the actual material received The incorrect part is received and the correct part is not received, constituting two errors.
What is an advantage of pre-assigning storage locations upon receipt? A. Zoning rules can be automatically applied by the computer. B. No empty locations will go unused. C. The material handler can select the location of his or her choice. D. Working stock and reserve stock can be separated.
A. Zoning rules can be automatically applied by the computer. Zoning rules can be applied with the pre-assignment.
What is the significance of a higher inventory turn rate for finished goods? A. Lower customer service B. Smaller risk of obsolescence C. Lower cost of goods sold D. Higher warehouse cost
B. Smaller risk of obsolescence Higher warehouse costs is incorrect because higher turns means goods move quicker through the warehouse. Lower customer service is incorrect because the opposite is likely to occur. Lower cost of goods sold is also incorrect because for higher inventory turns you would expect a higher ratio of cost of goods sold to average inventory value.
What information should a traceability system be able to provide? A. Arrival date B. Transfer of ownership C. Capable-to-promise D. Available-to-promise
B. Transfer of ownership Traceability provides the "who," among other things, which indicates the parties involved and the transfer of ownership between them. While the ongoing location of an item can be known with traceability, the arrival date can only be estimated.
Calculate the new total safety stock requirement given the following information: Present number of distribution centers: 1 Number of distribution centers being added: 3 Total safety stock now in distribution centers: 4,000 A. 2,000 B. 8,000 C. 4,000 D. 1,000
B. 8,000 8,000 is correct. Calculate the required safety stock in each location using the formula of safety stock divided by the square root of the total number of distribution centers (4 in this case). This gives 4,000 x SQRT(4) = 4,000 x 2 = 8,000 units of safety stock in total.
In an attempt to reduce costs associated with information system transactions, which of the following approaches should be considered? A. Backflushing component issues and reducing levels in the bill of material (BOM). B. Backflushing component issues, reducing levels in the bill of material (BOM), and using electronic data interchange (EDI) to transmit orders to suppliers. C. Backflushing component issues, using electronic data interchange (EDI) to transmit orders to suppliers, and reducing lot sizes of manufactured products. D. Reducing levels in the bill of material (BOM), using electronic data interchange (EDI) to transmit orders to suppliers, and reducing lot sizes of manufactured products.
B. Backflushing component issues, reducing levels in the bill of material (BOM), and using electronic data interchange (EDI) to transmit orders to suppliers. Backflushing enables a mass deduction of components on a BOM for a production order. By aggregating materials on a BOM (reducing levels), transactions will be reduced. By using EDI to submit orders, manual transactions will be reduced.
Which would be a logical inventory policy for "C" items according to ABC classification? A. Avoid counting at all during periodic inventories. B. Order in bulk as infrequently as possible. C. Order lot-for-lot from supplier. D. Phase out this inventory whenever possible.
B. Order in bulk as infrequently as possible. Part of the APICS Dictionary, 16th edition, definition of ABC classification is as follows: "The ABC principle states that effort and money can be saved through applying looser controls to the low-dollar-volume class items than to the high-dollar-volume class items." Since the cost of carrying this inventory is very low, ordering very infrequently will minimize ordering cost. Also, since there are fewer ordering points per year, there is a risk of stockout only at those few times. (A stockout of a low-cost component could be very expensive if it prevents completing an order.)
What needs to be considered during new product introductions to ensure that the reverse supply chain is as cost-effective as possible? A. How to ensure that the reverse product receiving area layout is compatible B. Whether to consider designing packaging for returns C. Whether returns will be processed internally or through a 3PL D. How to design the product for speed of returns
B. Whether to consider designing packaging for returns Packaging for returns may need to be considered along with packaging for forward shipping. This would best be done during product design. Speed of returns is not as important as lowering the cost of returns, such as by using design for sustainability.
Inventory that has been superseded by a new model and will never be used or sold at full value is defined as: A. distressed. B. obsolete. C. inactive. D. surplus.
B. obsolete. Obsolete inventory includes items that have met the obsolescence criteria established by the organization.
Uncontrollable inventory inaccuracies are most likely to be introduced into inventory when: A. storage is non-centralized. B. the amount recorded as received is based on the packing slip. C. incoming inspection is based on the quality plan. D. material movement is based on manual means.
B. the amount recorded as received is based on the packing slip. Accepting the supplier's quantity can introduce inventory inaccuracies. Inside the facility, every count discrepancy is controllable.
What is the most likely reason for establishing a financial tolerance when cycle counting? A. An inventory shortage beyond the tolerance requires material review board involvement. B. Exceeding the tolerance enables cost accounting to get involved to verify asset value. C. A tolerance requires an override from management, so the cause for error can be found. D. The adjustment meets the 80-20 rule for items requiring material planning re-explosion.
C. A tolerance requires an override from management, so the cause for error can be found. Tolerances provide an opportunity to recheck the count and then track the history of the usage, adjustments, and receipts to determine the cause of the error.
What would a job shop organization located in the U.S. need to get to put "Made in the U.S.A." on their products intended for export? A. Unique IDs at the instance level B. Shipper's export declaration C. Certificate of manufacture D. A lot traceability system
C. Certificate of manufacture The APICS Dictionary, 16th edition, defines a certificate of manufacture as a document that "attests that the goods were manufactured in the exporter's country. It is provided and signed by the exporter's chamber of commerce."
Which of the following priority rules is used in a dedicated assembly line? A. Critical ratio B. Required date C. First in, first out D. Last in, first out
C. First in, first out Dedicated assembly lines are FIFO (first in, first out) by design.
What effect does a write-off of inventory have on a company's profit and loss statement? A. It decreases current assets. B. It decreases the cost of goods sold. C. It decreases net earnings. D. It decreases the sales value.
C. It decreases net earnings. Writing off inventory increases operating expenses, which decreases gross profit and therefore net earnings. It also decreases assets, but we see this in the balance sheet, not in the profit and loss statement.
What cost includes the product cost plus the costs of logistics such as warehousing, transportation, and handling fees? A. Procurement cost B. Total line-haul cost C. Landed cost D. Activity-based cost
C. Landed cost Landed cost includes the product cost plus the costs of logistics such as warehousing, transportation, and handling fees.
An organization is looking to meet its sustainability goals but has budget constraints. Which is the best sustainability option for this organization? A. Change products to use only recyclable plastics. B. Install solar panels on the roofs of all facility buildings. C. Minimize total inventory investment by ordering efficiently. D. Match inventory turnover with the product life cycle.
C. Minimize total inventory investment by ordering efficiently. A lower inventory investment aligns with organizational sustainability objectives by avoiding excess inventory that may otherwise enter the waste stream if it becomes obsolete.
Which technique can be used by manufacturers and retailers that experience high variability in demand for their products to buffer the overall burden of having to deploy inventory for each product? A. Bundling B. Value chain initiative C. Risk pooling D. Consolidation
C. Risk pooling Risk pooling is a method often associated with the management of inventory risk.
Which of the following decisions is most likely to be made by the material planner? A. Determination of the forward pick position for a high-volume item B. Selection of the preferred storage location in a carousel system C. Selection of a statistical, fixed, or time period safety stock technique D. Establishment of the customer service level for a finished good
C. Selection of a statistical, fixed, or time period safety stock technique The planner is most likely to select the safety stock technique used for parts and categories of parts.
A cash register manufacturer and distributor has a network of dealers. The dealers have been returning too many units for insufficient cause despite the organization having a return policy. What can be done to enforce the policy while ensuring good customer service? A. Start implementing a waste hierarchy policy and welcome higher returns. B. Start implementing a warranty policy and accept only warranty returns. C. Start requiring a return material authorization (RMA) form. D. Start using a supplier relationship management (SRM) form.
C. Start requiring a return material authorization (RMA) form. An RMA is an official request to return products that needs to be approved by a responsible party. It will enable the organization to better enforce its existing return policy.
A company that makes products with multiple options is experiencing a temporary increase in sales. Which of the following inventories should be increased? A. Work in process B. Finished goods C. Subassemblies D. Raw materials
C. Subassemblies Increasing the subassemblies will allow flexibility to cover demand for various options and maintain lead times.
Which of the following reasons is most likely the cause for using safety lead time instead of safety stock? A. Carrying safety stock is too expensive. B. The part stocks out too frequently. C. Supply delivery reliability is a concern. D. Demand variability is too biased.
C. Supply delivery reliability is a concern. Using safety lead time will cause the order to be delivered earlier, minimizing the supplier delivery unreliability issue.
Purchasing several items together in order to lower ordering costs is known as: A. economic order quantity. B. concurrent replenishment. C. joint replenishment. D. periodic ordering.
C. joint replenishment. Joint replenishment is coordinating the lot sizing and order release decision for related items and treating them as a family of items. The objective is to achieve lower costs.
The amount of time an item may be held in inventory before it becomes unusable is: A. the product life cycle. B. lot control. C. the shelf life. D. a limited life.
C. the shelf life. The shelf life is the amount of time an item may be held in inventory before it becomes unusable.
Which is an example of how customer participation can be used to reduce customer-introduced variability for a service? A. Extending service hours B. Adding better scheduling tools and practices C. Adding ability for the customer to customize the service D. Adding automated kiosks
D. Adding automated kiosks Customer participation is when a customer participates in some part of the service or sales process by helping themselves. This often takes the form of automated kiosks for self-help. It reduces the load on the service staff.
At what point during the order cycle is inventory considered to become in-transit inventory? A. After order picking and packing are completed B. After the carrier schedules a window for delivery C. After the items have been allocated to the order and the vehicle is loaded D. After the driver signs the bill of lading
D. After the driver signs the bill of lading Once the carrier vehicle is loaded, the driver signs the bill of lading that documents exactly what goods are being transported. At that point, the driver can start delivery to the desired location(s). What the carrier is now transporting is called in-transit inventory.
Which of the following issues would be of greatest concern for a company choosing to reduce its finished goods inventory? A. Long production changeover time B. Product shelf life constraints C. Product quality requirements D. Customer service expectations
D. Customer service expectations Reducing finished goods inventories increases the probability of order stockout and disappointed customer expectations. Long changeover times, quality, and shelf life constraints could also be affected by inventory reductions but not as greatly as the blow to customer expectations.
Which of the following is true of the differences between inventory turns or costs in a distribution center (DC) versus for the manufacturer of the goods? A. Manufacturers typically approximate work-in-process value, so inventory turns tend to be more accurate in a distribution environment. B. Distribution environments tend to have lower turns because they don't carry any raw material inventory. C. The distribution environment has a higher cost of goods sold than does the manufacturer for the same finished goods. D. Distribution environments tend to have higher turns because inventory remains in stock for only a short time compared to that for a manufacturer.
D. Distribution environments tend to have higher turns because inventory remains in stock for only a short time compared to that for a manufacturer. Distribution cost of goods sold includes the cost to buy or transfer the goods from the warehouse as well as the additional material-handling costs. DCs carry inventory longer as it is based on a forecast; the manufacturer would ship directly to the DC based on demand.
Which of the following cost methods causes inventory valuation to decrease when costs increase? A. Actual B. Average C. First in, first out (FIFO) D. Last in, first out (LIFO)
D. Last in, first out (LIFO) The LIFO method causes inventory valuation to decrease when costs increase. All the others would cause inventory valuation to increase when costs increase.
A part has an effectivity date that goes into force tomorrow. What will change at that time? A. Engineering drawings but not part ID number B. Part ID number at the instance level only C. Part ID numbers at the batch/lot and instance levels only D. Part ID number at the class level
D. Part ID number at the class level At the class level, a product or part ID code identifies the unique product or part class. An effectivity date is the date when a new set of engineering drawings and documents come into effect. At that time, the new part will have a new part ID number at the class level. The instance level is a unique serialized ID to identify a unique instance of a product.
Which is the best way listed for an organization to encourage suppliers to avoid use of hazardous materials when feasible? A. Supplier co-location B. Zero tolerance policy C. Education D. Pricing incentives
D. Pricing incentives Pricing incentives help promote voluntary compliance. Education would also be helpful but may not be as effective without the pricing incentives. A zero tolerance policy may result in losing suppliers who are valuable in many other ways. Working with the supplier in a more flexible way could lead to buy-in and eventual compliance.
A make-to-stock organization sells premium clothing that comes in a wide variety of sizes. What sort of inventory policy would be best for this organization? A. Ordering far in advance B. Postponement C. Placement closest to point of customer demand D. Risk pooling
D. Risk pooling Products that have many different SKUs, such as sizes of shirts, will generate large inventories unless inventory is centralized. Risk pooling describes a method of centralizing inventory.
Which of the following would be true if LIFO (last in, first out) was used instead of FIFO (first in, first out) to value inventory during a time of inflation? A. The value of the inventory would be lower and the cost of goods sold would be lower. B. The value of the inventory would be higher and the cost of goods sold would be higher. C. The value of the inventory would be higher and the cost of goods sold would be lower. D. The value of the inventory would be lower and the cost of goods sold would be higher.
D. The value of the inventory would be lower and the cost of goods sold would be higher. With LIFO, the last units acquired (most expensive in times of inflation) would be consumed before the less expensive units, causing the inventory value to be lower and the cost of goods sold to be higher.
The target inventory level of a periodic review system is: A. an economic order quantity. B. an average. C. a minimum. D. a maximum.
D. a maximum. The order quantity may vary in the periodic review system, since it is the amount of inventory that is required to bring the total inventory to a maximum or target inventory level.
The carrying cost rate used in the economic order quantity is: A. based on the unit cost. B. a percentage of the ordering cost. C. calculated by the master scheduler. D. determined by management policy.
D. determined by management policy. Carrying costs include the cost of capital, risk costs, storage costs, etc. Management determines how much of the cost to apply to inventory based on a percentage of the financial value of inventory.
Products that are close to their expiration date and cannot be sold at full price are known as: A. inactive inventory. B. scrap. C. obsolete inventory. D. distressed goods.
D. distressed goods. Distressed goods are products that are damaged or close to their expiration date and cannot be sold at full price.
The information determined by a perpetual inventory system when an issue transaction is processed is the: A. issue quantity. B. issue location. C. beginning balance. D. ending balance.
D. ending balance. A perpetual inventory system maintains the current/ending balance on a transaction-by-transaction basis.
In master scheduling, hedging refers to a practice that A. provides safety capacity to protect against work center overload only B. provides safety lead time, and provides safety capacity to protect against work center overload only C. provides safety inventory in case option mixes are different from those forecast, and provides safety inventory in case volume is greater than forecast only D. provides safety lead time, provides safety inventory in case option mixes are different from those forecast, and provides safety inventory in case volume is greater than forecast only
D. provides safety lead time, provides safety inventory in case option mixes are different from those forecast, and provides safety inventory in case volume is greater than forecast only Hedging is a quantity of stock to protect against uncertainty of demand; it has the dimensions of timing and amount. The hedge may be either a mix hedge or a volume hedge. The other answers are incorrect because hedging is not related to safety capacity; hedging does use safety lead times to protect against late deliveries but does not use safety capacity; and hedging does provide safety inventory in case volume or option mixes are greater than forecast, but it also provides safety lead times to protect against late deliveries.
Serialization of individual inventory lots for tracking location and cost is an example of: A. earmarking. B. tagging. C. automatic identification and data capture. D. specific identification.
D. specific identification. Specification identification keeps track of the units of the beginning inventory and the units purchased.