3.4.5 Managing Inventory

Which of the following is NOT a cost associated with holding stock?

• Storage costs

• Wastage costs

• Opportunity costs

• Marketing costs

What is the term used for the minimum level of stock that a business needs to ensure it won't run out of raw materials or finished goods?

• Maximum stock

• Buffer stock

• Re-order level

• Lead time

What is the lead time in inventory control?

• The time it takes for goods to arrive after ordering

• The amount of stock needed to avoid running out

• The cost of holding stock

• The amount of stock ordered from the supplier

Which type of production requires a large stock of raw materials and no stock of finished goods?

• Flow production

• Batch production

• Job production

• Mass production

What is the formula to calculate the re-order level?

• Lead time (in days) × average daily usage

• Lead time (in days) × average daily usage + buffer stock level

• Lead time (in days) + average daily usage × buffer stock level

• Lead time (in days) + buffer stock level

What is the re-order quantity?

• The amount of stock a business needs to avoid running out

• The amount of stock ordered from the supplier

• The time it takes for goods to arrive after ordering

• The cost of holding stock

What is the term used to describe the minimum stock level that must be maintained to ensure production is not interrupted?

• Maximum stock

• Re-order level

• Buffer stock

• Lead time

At what stock level is a new order placed to replenish inventory?

• Maximum stock

• Re-order level

• Buffer stock

• Lead time

What is the term for the time taken between placing an order and receiving the stock?

• Maximum stock

• Re-order level

• Buffer stock

• Lead time

What is the maximum stock level shown in the graph?

• 1500 units

• 2000 units

• 2500 units

• 500 units