Ch 4 inventory management
Type: True or False The top 2 primary functions of inventory are (1) To meet customer demand, and (2) To buffer against uncertainty in demand and/or supply.
TRUE (correct)
Type: True or False The lowest inventory level at which a new order must be placed to avoid a stockout is known as the Replenishment Threshold
False
Type: True or False There are no inventories in the service industry.
False
Which inventory stock level is generally used for a very specific purpose or future event, and for a defined period of time? -Cycle Stock -Safety Stock -Strategic Stock -Pipeline Stock
Strategic Stock (correct)
The primary purpose of the basic economic order quantity model is? -To calculate the reorder point, so that replenishments take place at the proper time -To minimize the sum of carrying cost and holding cost -To maximize the customer service level -To minimize the sum of ordering cost and holding cost
To minimize the sum of ordering cost and holding cost (correct)
Type: True or False The four broad categories of inventory are raw materials, work-in-process, MRO, and finished goods.
True
Which of the following is NOT an example of an ordering cost for products purchased from a supplier? -The cost of transmitting the order -The cost associated with processing the invoice -The cost of receiving the product -The opportunity cost of not ordering from a least cost supplier -The cost of handling the product
The opportunity cost of not ordering from a least cost supplier (correct)
A type of inventory system that issues an order whenever a withdrawal is made from inventory, is known as? -ABC System -Bin System -Base Stock Level System -Single Period Inventory Model
Base Stock Level System (correct)
Inventory costs which are independent of the output quantity are called? -Indirect Costs -Variable Costs -Fixed Costs -Carrying Costs
Fixed Costs (correct)
Type: True or False The Economic Order Quantity (EOQ) is the optimal order size because it minimizes the annual total inventory cost.
TRUE (correct)