Inventory Management

Which of the following is the main objective of inventory management?

• Minimizing taxes

• Reducing customer satisfaction

• Ensuring materials are available for production and products are available for delivery

• Maximizing advertising costs

Which type of inventory is held to meet future demand?

• Raw materials

• Work-in-process

• Finished goods

• Maintenance supplies

Which of the following is not a function of inventory?

• To decouple operations

• To take advantage of quantity discounts

• To delay production

• To hedge against price increases

What is the term for stock that is held due to uncertainty in demand or supply?

• Cycle stock

• Safety stock

• Anticipation stock

• Seasonal stock

Which inventory type is associated with items currently being processed?

• Raw materials

• Finished goods

• Work-in-process

• Transit inventory

The Economic Order Quantity (EOQ) model primarily helps in:

• Calculating depreciation

• Determining the optimal order quantity

• Designing the layout of the warehouse

• Reducing labor cost

In the EOQ model, what happens if the order quantity is too high?

• Ordering costs decrease, holding costs increase

• Both ordering and holding costs decrease

• Holding costs decrease, ordering costs increase

• No effect on total cost

Which of the following is an assumption of the basic EOQ model?

• Demand is variable

• Lead time is uncertain

• No stockouts are allowed

• Quantity discounts are considered

What does the reorder point (ROP) indicate?

• Maximum stock level

• Minimum order quantity

• When to place a new order

• Total cost of inventory

The reorder point is affected by which of the following factors?

• Setup cost

• Holding cost

• Lead time and demand rate

• Advertising expenses