Free Printable CHAPTER 6_INVENTORY MANAGEMENT

Worksheets

CHAPTER 6_INVENTORY MANAGEMENT

Total questions: 11

Worksheet time: 6mins

Name

Class

Date

Among different types of costs associated with inventory, the costs of obtaining purchase approvals are ________.

purchasing costs

ordering costs

stockout costs

carrying costs

Among different types of costs associated with inventory, the opportunity cost of the investment tied up in inventory is a(n) ________.

purchasing cost

ordering cost

stockout cost

carrying cost

The purchase-order lead time is the ________.

time between placing an order and its delivery

time between receiving a customer order and producing the products

) time between receiving a customer order and delivering the items

time required to correct errors in the defective products

Which of the following costs is a relevant inventory stockout cost under EOQ decision model?

The costs of obsolescence and costs of insurance that change with the quantity of inventory held.

The return forgone by investing capital in inventory rather than elsewhere.

The lost contribution margin on sales forgone as a result of customer dissatisfaction due to unavailability of goods.

The costs of storage space owned that cannot be used for other profitable purposes when inventories decrease.

Which of the following statements is true of just-in-time (JIT) purchasing?

In JIT purchasing, the optimal safety-stock level is the quantity of safety stock that minimizes the sum of annual relevant stockout and carrying costs.

) JIT purchasing is guided solely by the EOQ model because that model emphasizes the tradeoff between relevant carrying and ordering costs.

In JIT purchasing, raw materials (or goods) are purchased so that products are delivered just as needed for production or sales.

Only disadvantage of JIT purchasing is the higher level carrying and inspection costs.

Finished goods inventory is the amount of manufactured product in stock that is available for sale.

TRUE

FALSE

This refers to items that the manufacturer has purchased or produced to use in manufacturing a product.

raw material inventory

Work in process inventory

Finished good inventory

Total inventory cost =

carrying cost

ordering cost

carrying cost + ordering cost

carrying cost - ordering cost

Below are the importance of inventory control, except;

How to maximize costs involved, which could directly increase production

How much inventory to be ordered to replace sold inventory

When to order inventory to prevent excess or deficiency in storage

What type of inventory is suitable for the production process

10.

What is EOQ?

Economics Order Quality

Economics Output Order

Economics Order Quantity

Ergonomics Order Quantity

11.

Reorder level determines how low inventory should be before reordering occurs.

TRUE

FALSE

Reset

CHAPTER 6_INVENTORY MANAGEMENT

Total questions: 11

Worksheet time: 6mins

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