Supply Chain Management 512 Topic 1& 2

1. 1. According to Investor Words (2014), inventory is defined as:

• A) Only finished goods ready for sale

• B) Raw materials, finished goods or merchandise which has not been sold

• C) Products currently being manufactured

• D) Items that have been sold but not delivered

2. 2. Inventory items are classified in financial statements as:

• A) Liabilities

• B) Expenses

• C) Assets

• D) Revenue

3. 3. Which direction does inventory move when it goes toward the customer?

• A) Upstream

• B) Downstream

• C) Lateral

• D) Vertical

4. 4. Inventory moving upstream typically has:

• A) Higher value than downstream inventory

• B) Lower value than finished products

• C) The same value as finished products

• D) No assigned value

5. 5. Cycle inventory refers to:

• A) Inventory that cycles through different warehouses

• B) The usual inventory kept on shelves for normal day-to-day sales

• C) Inventory that expires in cycles

• D) Seasonal inventory only

6. 6. Safety stock is kept primarily to:

• A) Reduce storage costs

• B) Handle unexpected increases in demand

• C) Improve product quality

• D) Reduce ordering frequency

7. 7. Anticipation inventory differs from safety stock because:

• A) It costs less to maintain

• B) It is kept when an increase in demand is expected

• C) It is never used

• D) It requires special storage

8. 8. Pipeline inventory consists of:

• A) Stock stored in pipelines

• B) Liquid products only

• C) Stock that has been ordered but not yet received

• D) Damaged inventory

9. 9. Work-In-Progress (WIP) inventory is:

• A) Completed products waiting for shipment

• B) Stock that has not entirely moved through the manufacturing process

• C) Raw materials in storage

• D) Returned products

10. 10. Reconditioned inventory refers to:

• A) New products with defects

• B) Stock that can be reused

• C) Expired products

• D) Promotional items