Chapter 20: Inventory Management

Average inventory value is calculated as... Multiple choice question. Averageinventoryvalue/Costofgoodssold (Q2 + SS)XC Costofgoodssold/Averageinventoryvalue

(Q2+SS)C

Which of the following is NOT a reason to use inventory as a safeguard against raw material delivery time variation? Multiple choice question. Normal variation in shipping time. An unexpected strike at a vendor's plant. As a supplement to vendor-managed inventory programs. Shortage of material at the vendor's plant.

As a supplement to vendor-managed inventory programs.

Which of the following is NOT a good reason to hold inventory? Multiple choice question. As needed to shift from one raw material supplier to another To buy ahead in anticipation of significant raw material price increases As needed to improve company cash flow To build a bank of finished goods to protect customers from a potential strike at your plant

As needed to improve company cash flow

What is the portion of the EOQ equation represents annual purchase price? Multiple choice question. TC DC (D/Q)*H (Q/2)*H

DC

The stock of any item or resource used in an organization is called? Multiple choice question. Inventory Inputs Work in process Raw materials

Inventory

_______________ is the stock of any item or resource used in an organization.

Inventory

A key financial ratio directly tied to inventory is called? Multiple choice question. Inventory turns Earnings per share Cost of goods sold Debt ratio

Inventory turns

Because of favorable pricing in the short-term, a company is looking at ordering a larger-than-needed optimal quantity of an item, and keeping the excess in inventory. Which model is the company likely performing to arrive at this decision? Multiple choice question. Price break Cycle count Inventory turns Time-period

Price break

What is the portion of the EOQ equation represents annual holding cost? Multiple choice question. TC DC Q/2*H D/Q*H

Q/2*H

The reorder point is Blank______. Multiple choice question. ZL zσL R bar-d*L

R

Which of the following highlights a dependent demand scenario? Multiple choice question. Smart phones purchased at retailer The four tires needed to complete a car Flowers purchased at a garden center Gallons of milk purchased at a grocery store

The four tires needed to complete a car

Dependent demand

The need for an item is a direct result of the need for some other item usually an item of which it is a part. Also, when the demand for the item can be predicted with accuracy due to a schedule or specific activity

Select all that apply An inventory control system is responsible for which of the following? Multiple select question. Timing the order placement Selecting new vendors Finding the best price for goods Keeping track of what has been ordered Ordering goods Receiving goods

Timing the order placement Keeping track of what has been ordered Ordering goods Receiving goods

Which of the following is not a cost associated with inventory management? Multiple choice question. Setup costs Ordering costs Holding costs Transportation costs Shortage costs

Transportation costs

True or false: One purpose of holding inventory is to meet variation of product demand.

True Purposes of inventory: 1) Maintain independence of operations 2) Meet variation in product demand 3) Allow flexibility in production scheduling 4) Provide a safeguard for variation in raw material delivery time 5) Take advantage of economic purchase order size 6) Many other domain-specific reasons

Demand is characterized as independent if it comes from sources _________ to the firm and is not related to other __________ .

external, outside, foreign; products

Campbell's Soup makes product for Kroger and other grocery stores based on sales to the final consumer. This inventory management environment is characterized as ________ demand. Multiple choice question. dependent marketing forecasted independent

independent

An __________ _________system provides the organizational structure and the operating policies for maintaining and controlling goods to be stocked.

inventory control

The managerial and clerical costs to prepare purchase or production orders are called: Multiple choice question. ordering costs shortage costs holding costs logistics costs

ordering costs

If safety stock is ___________, the effect is to place a reorder sooner.

positive

A price-break model suggests that the _______ price of an item varies with order _______ . (Enter only one word per blank.)

selling, size

The amount of safety stock is: Multiple choice question. ZL bar-d*L R zσL

zσL