Inventory Management

Among different types of costs associated with inventory, the costs of obtaining purchase approvals are ________.

• purchasing costs
• ordering costs 
• stockout costs 
• carrying costs

Among different types of costs associated with inventory, the opportunity cost of the investment tied up in inventory is a(n) ________.

• purchasing cost 
• ordering cost
• stockout cost
• carrying cost

The purchase-order lead time is the ________.

• time between placing an order and its delivery
• time between receiving a customer order and producing the products 
• ) time between receiving a customer order and delivering the items 
• time required to correct errors in the defective products 

Which of the following statements  is true of just-in-time (JIT) purchasing?

• In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs.
• ) JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs.
• In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales.
• Only disadvantage of JIT purchasing is the higher level carrying and inspection costs.

Stock losses will result in ...

• An increase in Revenue

• An increase in Expenses

• An increase in Assets

• An decrease in Liabilities

Inventory management helps businesses be successful…. It requires the understanding of

• Inventory Levels

• Inventory Value

• Both

Work in progress inventory is the goods the customers are awaiting delivery of.

• True

• False

There are various advantages for holding inventory but one of the following is not.

• The organisation can take advantage of discounts from suppliers on quantities purchased.

• In expected demand can be met.

• Inventory can be used to hedge against inflation.

• Opportunity cost is incurred

When demand exceeds supply the organisation will loose sales due to unavailability of the products.

• True

• False

• None of the above

............... is not a counting system that can be utilised when counting inventory.

• Periodic counting system

• Perpetual counting system

• Demand forecasting