1. The costs associated with inventory is/are
A. Purchase price of the inventory
B. Re-order costs
C. Inventory holding costs, Shortage costs
D. All of the above
2. In ABC analysis which inventory is classified into category ‘A’ items?
A. Annual consumption cost is around 15-25%
B. Annual consumption cost is around 70-80%
C. Annual consumption cost is around 5-10%
D. Annual consumption cost is around 50%
3. Shortage costs of inventory include
A. Lost profit on sale
B. Future loss of profit due to loss of customer goodwill
C. Costs due to production stoppage due to shortage of raw materials
D. All of the above
4. Cycle inventory helps in
A. Finding out the amount of stock required during a finite period in order to move the materials from one location to another
B. Taking advantage of economies of scale and reducing cost within the supply chain
C. Taking care of any special event that does not occur on a regular basis
D. All of the above
5. Re-order costs are the costs of making orders to purchase a quantity of a material item from a supplier. They include costs such as:
A. The cost of delivery of the purchased items, if these are paid for by the buyer
B. The costs associated with placing an order, such as the costs of telephone calls
C. Costs associated with checking the inventory after delivery from the supplier
D. All of the above
6. Inventory holding costs include:
A. Cost of capital tied up
B. Insurance costs
C. Cost of warehousing, obsolescence, deterioration and theft
D. All of the above
7. Buffer/safety inventory – the basic level of inventory kept for emergencies. A buffer is required because both demand and lead time will fluctuate and predictions can only be based on best estimates.
A. The above statement is correct
B. The above statement is incorrect
8. The inventory which is dependent on alternative modes of transportation is known as
A. Safety inventory
B. Pipeline inventory
C. Cycle inventory
D. Seasonal inventory
9. In ABC analysis which inventory is classified into category ‘B’ items?
A. Annual consumption cost is around 15-25%
B. Annual consumption cost is around 70-80%
C. Annual consumption cost is around 5-10%
D. Annual consumption cost is around 50%
10. The best strategy of minimizing the amount of safety inventory to be kept in a store without hurting the level of customer service is
A. Minimizing the cycle service level
B. Reducing the supply lead time
C. Minimizing the uncertainty inherent in supply
D. Minimizing the uncertainty inherent in demand
