Inventory Control Models Quiz

What is one of the major functions of inventory?

• To decouple manufacturing processes

• To reduce product quality

• To increase manufacturing delays

• To eliminate all stockouts

What percentage of total invested capital can inventory represent for many companies?

• 75%

• 50%

• 25%

• 10%

What is the primary objective in controlling inventory?

• Maximizing stock levels

• Minimizing total inventory costs

• Increasing order frequency

• Eliminating all inventory

Which of the following is NOT a cost associated with inventory?

• Cost of ordering

• Cost of marketing

• Cost of carrying inventory

• Cost of items

What does EOQ stand for?

• Economic Order Quantity

• Effective Order Quantity

• Estimated Order Quantity

• Essential Order Quantity

What is the reorder point (ROP)?

• The average inventory level

• The inventory level at which an order should be placed

• The minimum inventory level

• The maximum inventory level

In the EOQ model, which assumption is made about demand?

• Demand is unpredictable

• Demand is seasonal

• Demand is known and constant

• Demand is variable

What is a key assumption of the EOQ model regarding lead time?

• Lead time is known and constant

• Lead time is not considered

• Lead time is unknown

• Lead time is variable

What is one of the uses of inventory related to seasonal products?

• To reduce storage space

• To eliminate stockouts

• To store resources for constant demand

• To increase production costs

What happens when inventory levels are too low?

• Increased customer satisfaction

• Increased stockouts

• Decreased carrying costs

• Increased production efficiency