Inventory Management As Level

Lead time is the time between placing an order and the order being delivered. Look at the inventory control chart. What is the lead time ?

• 1 week

• 3 weeks

• 2 weeks

• 4 weeks

What is the buffer inventory level?

Buffer inventory level is kept in reserve in case of a late delivery or

an increase in demand.

• 150 units

• 100 units

• 50 units

• 200 units

All of the following are costs of not holding enough inventories, except:

• idle machinery

• lost customer orders

• obsolescence

• the cost of having to make urgent orders

Which one of the following is not a cost of holding inventories?

• wastage

• opportunity cost

• warehousing costs

• lost sales

In which one of the following circumstances is JIT inventory control least likely to be effective?

• when demand is predictable

• when suppliers are located close by

• when production staff are multi-skilled

• when traditional quality - inspection method are used

In which of the following circumstances is JIT inventory control most likely to be used?

• when the cost of any halt to production is high

• during a period of high global inflation

• in an industry in which there is a high risk of obsolescence

• where there is a weak relationship between the manufacturer and the supplier