Chapter 14 Inventory Management

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.

The __________ is the level of inventory the business should hold at the very minimum to satisfy customer demand at all times.

• buffer inventory level

• Reorder level

• lead time

• None

During the lead time the inventory will have hit the buffer level and as reorder arrives, it will shoot back up to the maximum level - which depends on the space the business has available and the amount of money they have to spend. This minimum amount of inventory is called the __________.

• buffer stock

• buffer level

• Both

• None

The time it takes for the reorder supply to arrive is known as the __________.

• Reorder level

• None

• lead time

• Order time

What is mean by Opportunity cost in general and in Inventory management -

• the money spent on materials that may not even be used could instead be used for other purposes.

• Best alternative forgone

• None

• There is no opportunity cost in Inevntory Management

Disadvantages of Inventory Management

• Money on security

• Money in warehouse

• not losing clients

• None

Inventories hold -

• semi - finished

• finished

• raw materials

• None

What do you mean by reorder level

• is the inventory level at which a business would place a new order or begin a new production run.

• Enables businesses to have enough inventory to satisfy the client.