Inventory Management Quiz

What is the primary goal of just-in-time inventory?

• Maximize inventory holding costs and reduce efficiency

• Minimize customer satisfaction and increase costs

• Ignore inventory holding costs and maintain inefficiency

• Minimize inventory holding costs and improve efficiency

Name one advantage and one disadvantage of just-in-time inventory.

• Advantage: Higher risk of overstock. Disadvantage: Lower risk of stockouts.

• Advantage: Longer production lead time. Disadvantage: Reduced storage space.

• Advantage: Increased carrying costs. Disadvantage: Reduced lead time.

• Advantage: Reduced carrying costs. Disadvantage: Susceptibility to supply chain disruptions.

What is the main purpose of just-in-case inventory?

• To reduce the risk of overstocking

• To speed up the delivery process

• To increase the cost of inventory management

• To mitigate the risk of stockouts and supply chain disruptions.

Explain the concept of safety stock in just-in-case inventory.

• Extra inventory held to reduce the risk of stockouts

• Inventory held to maximize the risk of stockouts

• Extra inventory held to mitigate the risk of stockouts

• Inventory held to increase the risk of stockouts

What are the main components of inventory control?

• Demand forecasting, inventory planning, inventory tracking, and inventory optimization

• Sales forecasting, inventory counting, inventory disorganization, and inventory chaos

Describe the difference between perpetual and periodic inventory control systems.

• Perpetual inventory system only works for small businesses, while periodic inventory system is for large businesses.

• Perpetual inventory system and periodic inventory system are the same thing.

• Perpetual inventory system continuously updates the inventory balance after each transaction, while periodic inventory system updates the inventory balance at specific intervals.

• Perpetual inventory system updates the inventory balance at specific intervals, while periodic inventory system continuously updates the inventory balance after each transaction.

What is buffer inventory and why is it important in inventory management?

• Buffer inventory is the stock that is intentionally damaged to avoid overstocking. It is important in inventory management to improve product quality and customer satisfaction.

• Buffer inventory is the stock that is kept in a separate location away from the main inventory. It is important in inventory management to increase transportation costs and storage space.

• Buffer inventory is the stock that is expired and no longer usable. It is important in inventory management to reduce waste and save costs.

• Buffer inventory is the extra stock held to protect against uncertainties in demand, supply, and lead time. It is important in inventory management to prevent stockouts and ensure smooth production and customer satisfaction.

Explain how buffer inventory helps in managing uncertainties in demand and supply.

• Buffer inventory provides a safety stock to cover unexpected fluctuations in demand or supply.

• Buffer inventory helps in reducing the carrying costs of inventory

• Buffer inventory is used to reduce the lead time for ordering supplies

• Buffer inventory is only used for managing uncertainties in demand, not supply

What is reorder level in inventory management?

• The reorder level is the inventory level at which a new order should be placed to replenish the stock before it runs out.

• The reorder level is the inventory level at which the stock should be sold at a discount

• The reorder level is the inventory level at which the stock should be stored in a different location

• The reorder level is the inventory level at which the stock should be discarded

How is the reorder level calculated and why is it important for businesses?

• The reorder level is calculated based on the number of employees in the business, and it is important for businesses to keep track of their workforce.

• The reorder level is calculated by looking at the competition in the market, and it is important for businesses to stay ahead of their rivals.

• The reorder level is calculated by considering the lead time for delivery, the average daily usage, and the safety stock. It is important for businesses to ensure that they have enough inventory to meet demand without overstocking, which can tie up capital and lead to storage costs.

• The reorder level is calculated by flipping a coin, and it is important for businesses to take risks in their inventory management.