Inventory Management Quiz

What is the objective of inventory management?

• Maximize inventory investment

• Ignore customer service

• Minimize customer service

• Strike a balance between inventory investment and customer service

Which type of inventory represents as much as 50% of total invested capital for many companies?

• Purchased but not processed

• Finished goods

• Work-in-process (WIP)

• Raw material

What is the function of maintenance/repair/operating (MRO) inventory?

• To take advantage of quantity discounts

• Necessary to keep machinery and processes productive

• To provide a selection of goods for anticipated demand

• To hedge against inflation

What type of inventory is completed product awaiting shipment?

• Finished goods

• Work-in-process (WIP)

• Purchased but not processed

• Raw material

What is the purpose of decoupling or separating various parts of the production process?

• To provide a selection of goods for anticipated demand

• To decouple or separate various parts of the production process

• To hedge against inflation

• To take advantage of quantity discounts

What type of inventory is undergone some change but not completed?

• Work-in-process (WIP)

• Purchased but not processed

• Maintenance/repair/operating (MRO)

• Raw material

What is the advantage of taking advantage of quantity discounts?

• To provide a selection of goods for anticipated demand

• To decouple or separate various parts of the production process

• To take advantage of quantity discounts

• To hedge against inflation

What is the purpose of raw material inventory?

• To hedge against inflation

• To take advantage of quantity discounts

• To decouple or separate various parts of the production process

• To provide a selection of goods for anticipated demand