Ch. 13 true or false
According to the 80-20 rule, approximately 20 percent of a company's income comes from 80 percent of its products.
F
Fully integrated production networks aid U.S. companies in global operations.
F
High quality tends to result in lower production costs.
F
It is impossible to determine the optimum lot size for items a company produces for itself.
F
Just-in-time delivery increases inventory costs.
F
Most small businesses are successful in purchasing when they use a single source of supply.
F
Small businesses should never subcontract production to deal with seasonal variations in demand.
F
Stockouts reduce inventory excesses and increase profits.
F
Suppliers should be chosen on the basis of price alone.
F
Supplies for use in offices and shops should not be counted as inventory.
F
The Federal Acquisition Streamlining Act prohibits government agencies from purchasing off-the-shelf items.
F
The responsibility for purchasing should be assigned to several people in a company to get the best quality items.
F
An ideal inventory level exists when items arrive just in time for sale to customers.
T
Businesses that use a single source of supply for a material receive better service from the supplier than those that use many sources of supply.
T
Close coordination between an owner and a supplier can improve efficiency by shifting inventory costs to the distributors.
T
Issuing purchase orders creates legal records of purchase.
T
Opportunity costs are profits lost because money is tied up in inventory.
T
Receiving ordered goods and placing them in inventory are the last steps in the purchasing procedure.
T
Scheduling is setting the times and sequences needed to perform specialized activities.
T
Small businesses should develop a rating system to select, evaluate, and retain suppliers.
T
Standing orders simplify the purchasing procedure and allow for long-range planning.
T
Supplier-base downsizing means reducing the number of suppliers to concentrate purchasing.
T
Suppliers should be chosen to meet carefully set quality and service standards.
T
The amount of inventory after the sale of a finished product should be in balance with customer demand to minimize total costs.
T
The economic order quantity is determined by balancing the cost of placing an order with the costs of carrying inventory in stock.
T
The reason for carrying inventory is to disconnect one segment of the operating process from another so each part can operate at its optimum level.
T
There is no way to avoid carrying inventory, so the best an owner can do is manage its movement and control its costs.
T
The cost of materials and services needed to produce a product is usually one-fourth of the revenue received for it.
f
Materials that have a high cost relative to revenue take up a large share of a small business owner's time.
t
Purchasing for a manufacturing plant involves getting the proper materials and processing them into finished goods while maintaining inventory and quality control.
t
