Inventory and Operations Strategy

An operations strategy which recognizes high carrying costs and reduces ordering costs will result in:

• unchanged order quantities

• slightly decreased order quantities

• greatly decreased order quantities

• slightly increased order quantities

The need for safety stocks can be reduced by an operations strategy which:

• increases lead time

• increases lead time variability

• increases lot sizes

• decreases lead time variability

Which of the following is not an inventory ?

• Machines

• Raw materials

• Finished products

• Consumable tools

Carrying cost is a function of order size; the larger the order, the higher the inventory carrying cost.

• True

• False

Does safety stock eliminate stock outs?

• Yes

• No

All stockouts must be avoided.

• True

• False

Damaged or obsolete inventory may have a value below original cost. It should be written down to Select one:

• Cost using the FIFO assumption

• Cost using the LIFO assumption

• Cost less Cost to Sell

• Sales Value less Cost to Sell

Current Assets ÷ Current Liabilities is the formula for which ratio?

• Inventory Turn Ratio

• Current Ratio

• Quick Ratio

How do you find the working capital?

• current assets + current liabilities

• current assets - current liabilities

• current assets *current liabilities

• current assets/current liabilities

Which are not the 3 major types of ratios?

• Liquidity

• Solvency

• Profitability

• Holding cost