OPM530 BA235 Inventory Management Quiz

What is the definition of inventory?

• Expenses incurred in production

• Assets held for future use or sale

• Liabilities held for future use or sale

• Income generated from sales

What percentage of a firm's assets is typically held in inventory?

• 10%

• 30%

• 70%

• 50%

What is the objective of inventory management?

• To maximize inventory investment

• To minimize customer service

• To eliminate inventory entirely

• To strike a balance between inventory investment and customer service

What is the function of inventory in taking advantage of quantity discounts?

• To buy less than needed to save money

• To ignore quantity discounts

• To buy more than needed to get a discount

• To buy exactly what is needed

What is the purpose of hedging against inflation in inventory management?

• To protect against price fluctuations

• To ignore price changes

• To decrease inventory costs

• To increase inventory costs

What is the definition of work in process inventory?

• Completed products ready for distribution

• Partially finished products waiting for further processing

• Component parts and supplies

• Raw materials not yet processed

What is the lead time in inventory management?

• The time between placement of an order and its receipt

• The time it takes for a product to be made

• The time it takes for a product to be delivered to a customer

• The time between production runs

What is a stock keeping unit (SKU) in inventory management?

• The total cost of all inventory

• The total number of items in inventory

• A single item or asset stored at a particular location

• The total value of all inventory

What is the purpose of a reliable forecast of demand in inventory management?

• To decrease inventory costs

• To increase lead times

• To manage inventory effectively

• To ignore customer demand

What is the definition of cycle time in inventory management?

• The time it takes for a product to be made

• The time between placement of an order and its receipt

• The time between production runs

• The time it takes for a product to be delivered to a customer