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Cycle counting:

• ●      is a process by which inventory records are verified once a year.

• ●      eliminates annual inventory adjustments.

• ●      provides a measure of inventory turnover.        

• ●      assumes that all inventory records must be verified with the same frequency.

What is the difference between P and Q inventory systems?      

• ●      order receiving date     

• ●      timing of orders           

• ●      service level     

• ●      lead time

Which of the following is a function of inventory?         

• ●      to decouple various parts of the production process

• ●      to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand      

• ●      to take advantage of quantity discounts

• ●      All of the above are functions of inventory.

Which of the following is a function of inventory?         

• ●      to decouple various parts of the production process

• ●      to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand      

• ●      to take advantage of quantity discounts

• ●      All of the above are functions of inventory.

The purpose of safety stock is to:                      

• ●      eliminate the possibility of a stockout.  

• ●      protect the firm from a sudden decrease in demand.     

• ●      replace failed units with good ones.

• ●      control the probability of a stockout due to variable demand and/or lead time.

In the basic economic order quantity model, the average amount of inventory on hand: 

• ●      is zero.

• ●      is one-half of the economic order quantity.       

• ●      is affected by the amount of product cost.                    

• ●      goes down if the holding cost per unit goes down.

Which of the following is NOT one of the four main types of inventory?

• ●      raw material inventory

• ●      maintenance supply inventory

• ●      safety stock inventory

• ●      finished-goods inventory

An inventory decision rule states, "When the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is TRUE?

• ●      One hundred is the reorder point, and 14 is the order quantity.

• ●      One hundred is the order quantity, and 14 is the reorder point. 

• ●      Fourteen is the safety stock, and 100 is the reorder point.

• ●      None of the above is true.

Which of the following should be higher in P inventory systems than Q systems?

• ●      lead time

• ●      safety stock

• ●      order quantity

• ●      demand

All EXCEPT which of the following statements about ABC analysis are TRUE?      

• ●      In ABC analysis, inventory may be categorized by measures other than dollar volume.    

• ●      ABC analysis suggests that all items require the same high degree of control.                 

• ●      ABC analysis categorizes on-hand inventory into three groups based on annual dollar volume.

• ●      ABC analysis suggests that there are the critical few and the trivial many inventory items.