Inventory Management Quiz

What does inventory include in a business context?

• Only raw materials

• Finished goods only

• Raw materials, work-in-process goods, and finished goods

• Only work-in-process goods

What is the primary focus of inventory management?

• Reducing production costs

• Specifying the shape and percentage of stocked goods

• Increasing the number of suppliers

• Minimizing employee turnover

What does "Just in Time" (JIT) production strategy aim to achieve?

• Increase inventory levels to prevent stockouts

• Reduce in-process inventory and associated carrying costs

• Maximize production output regardless of inventory levels

• Maintain a large stock of finished goods

What is a key disadvantage of the JIT system?

• Increased waste due to excess inventory

• Dependence on timely delivery from suppliers

• Higher costs associated with bulk purchasing

• Complexity in managing supplier relationships

What is the purpose of Kanban in a JIT system?

• To increase production speed regardless of demand

• To signal when to manufacture the next part

• To eliminate all forms of inventory

• To manage supplier relationships

How did Michael Dell's business model operate regarding inventory?

• He maintained a large stock of spare parts.

• Customers built their computer specifications online, and each computer was built to order without leftover parts.

• He produced computers in bulk and stored them for later sale.

• He relied on third-party suppliers for all components.

What is the term used for running out of the inventory of a Stock Keeping Unit (SKU)?

• Overstock

• Stockout

• Backorder

• Inventory depletion

Which of the following best describes the philosophy of Just in Time (JIT)?

• Inventory is essential for smooth operations.

• Inventory should be minimized as it is considered waste.

• Maintaining large inventories ensures customer satisfaction.

• JIT requires purchasing in bulk to reduce costs.

Why are supplier relationships emphasized in a JIT system?

• They reduce production costs significantly.

• Timely delivery from suppliers is crucial to avoid production delays.

• Suppliers are responsible for managing inventory levels.

• Supplier relationships have no impact on JIT effectiveness.

What does effective inventory management help a business achieve?

• Higher levels of unsold products

• Increased carrying costs

• On-time delivery and reduced excess inventory

• Dependence on multiple suppliers