CHAPTER 8: INVENTORY MANAGEMENT

1. ____ refers to stocks of goods and materials that are maintained for many purposes, the most common being to satisfy normal demand patterns.

• a. logistics

• b. supply chain management

• c. inventory

• d. production

2. Holding high levels of inventory result in ____ inventory carrying costs and ____ stockout costs.

• a. high; high

• b. high; low

• c. low; high

• d. low; low

3. ____ stock refers to inventory that is needed to satisfy normal demand during the course of an order cycle.

• a. base

• b. speculative

• c. pipeline

• d. safety

4. ____ stock refers to inventory that is held in addition to cycle stock to guard against uncertainty in demand and/or lead time.

• a. base

• b. pipeline

• c. speculative

• d. buffer

5. ____ stock refers to inventory that is en route between various nodes in a logistics system.

• a. base

• b. safety

• c. speculative

• d. cycle

• e. none of the above

6. ____ stock refers to inventory that is held for several reasons, to include seasonal demand, projected price increases, and potential shortages of product.

• a. base

• b. safety

• c. pipeline

• d. speculative

7. ____ stock is carried to stimulate demand.

• a. base

• b. psychic

• c. speculative

• d. attractive

• e. none of the above

8. Inventory costs in the United States in the twenty-first century represent approximately ____ of total logistics costs.

• a. one-fifth

• b. one-fourth

• c. one-third

• d. one-half

9. All of the following statements are true, except:

• a. the importance of individual carrying costs factors (categories) is generally consistent from product to product

• b. inventory carrying costs consist of a number of different components or factors

• c. in general, companies prefer to carry less inventory as carrying costs increase

• d. in general, inventory carrying costs are expressed in percentage terms

• d. all of the above are true

10. Inventory carrying costs in the United States in the twenty-first century have ranged between ____ and ____ percent.

• a. 4; 9

• b. 9; 14

• c. 14; 19

• d. 19; 24