Inventory Management Quiz

What is the primary goal of inventory management?

• To ensure sufficient stock for production and sales

• To eliminate all carrying costs

• To maximize stock levels

• To minimize stock levels

What does EOQ stand for in inventory management?

• Economic Order Quantity

• Estimated Order Quantity

• Effective Order Quantity

• Essential Order Quantity

Which of the following statements about EOQ is TRUE?

• A higher EOQ always leads to lower costs

• EOQ is independent of holding and ordering costs

• EOQ helps balance ordering and holding costs

• EOQ is always a fixed value for any business

What is the formula for calculating EOQ?

• EOQ = 2DO/H

• EOQ = D/(2O + H)

• EOQ = D + O/H

• EOQ = 2H/D

Which of the following is NOT a carrying cost?

• Deterioration and obsolescence

• Insurance and security

• Transport costs

• Interest on capital invested in stock

What is the average stock level formula?

• Minimum stock level + (Reorder Level / 2)

• Reorder Level - (Minimum stock level / 2)

• Maximum stock level - (Reorder Level / 2)

• Reorder Level + (Maximum stock level / 2)

Which of the following is a stockout cost?

• Insurance and security

• Storage charges

• Lost contribution through lost sales

• Material handling costs

The purpose of setting a maximum stock level is to:

• Ensure there is no shortage of stock
  

• Minimize excess capital tied in inventory

• Increase order frequency

• Reduce transportation costs

What happens if the stock level falls below the minimum stock level?

• Production stops or delays may happen

• Overstocking occurs
  
  
  

• Production stops or delays may happen

• Costs decrease

Which of the following factors affects the reorder level?

• Lead time
  
  
  

• Demand rate

• Safety stock level

• All of the above