Inventory control

The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable.

• True

• False

The objective of inventory management is to minimize holding costs

• True

• False

When using EOQ ordering, the order quantity must be computed in every order cycle

• True

• False

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

The ideal order quantity a company should purchase for its inventory given a cost set of production, demand rate, and other variables is known as:

• Reorder point

• Economic order quantity

• Anticipation stock

• Inventory control

Under  economic-order-quantity decision model, it is assumed that ________.

• the quantity ordered can vary at each reorder point 
• demand, ordering costs, and carrying costs are uncertain
• the purchasing cost per unit is affected by the order quantity
• no inventory stockouts occur

Buffer stock:

• Goods kept in store to cover seasonal
  demand e.g. Christmas sale
• b Goods kept in store to cover unforeseen
  shortages or fluctuations in demand

Inventory is another word for:

• Stock

• Finance

• Staff

• Managers

Identify the costs and risks of OVERstocking:

• Customers will not be able to buy what they want

• Staff will be made redundant

• Higher storage costs

• Items could deteriorate with age

The maximum order level is:

• The amount of inventory that the business should not fall below

• The amount of inventory that the business should not rise above

• The time that it will take for the stock to be delivered to the business

• The maximum amount of stock that the customer is allowed to order