WorksheetsInventory Management
Total questions: 25
Worksheet time: 13mins
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
Which inventory review system places an order at fixed time intervals?
Continuous review system
Periodic review system
JIT system
Kanban system
The Just-In-Time (JIT) inventory system aims to:
Increase inventory levels
Reduce inventory waste
Eliminate supplier relationships
Extend lead times
In a fixed order quantity system, what triggers a reorder?
Time
Level of inventory reaching a reorder point
Supplier request
Budget approval
Which of the following is NOT a benefit of effective inventory management?
Improved customer service
Reduced storage costs
Increased stockouts
Better production planning
Lead time in inventory management refers to:
Time taken to sell a product
Time taken to complete an order
Time between ordering and receiving inventory
Time between shipments
The ABC analysis is primarily based on:
Product size
Alphabetical order
Annual consumption value
Supplier rating
In ABC classification, 'A' items typically represent:
The largest quantity of items
The lowest consumption value
The smallest percentage of items with the highest value
Non-essential items
Which of the following statements about ABC analysis is TRUE?
All inventory items have equal importance
B items are more important than A items
C items require the highest level of control
A items require the tightest control and frequent review
What is the usual percentage range for 'A' class items in inventory quantity?
50–60%
10–20%
30–40%
70–80%
Which of the following is a key benefit of ABC classification?
It eliminates the need for safety stock
It improves production efficiency
It helps prioritize inventory management efforts
It increases total inventory
Which item is likely to be classified as a ‘C’ item?
Expensive raw material
High-value finished goods
Low-cost bolts and nuts used in assembly
Imported specialized parts
In ABC analysis, the total value of A-class items is approximately:
10% of total inventory value
70–80% of total inventory value
50% of total inventory value
Equal to C-class value
Which technique is commonly used to conduct ABC classification?
Regression analysis
Pareto analysis
SWOT analysis
Monte Carlo simulation
The ABC analysis helps management by:
Providing exact forecast for demand
Setting uniform policies for all items
Allowing differentiated control policies for different items
Eliminating the need for forecasting
What kind of control is typically applied to C-class items in ABC classification?
Strict and frequent control
Moderate control
Minimal control
No control at all
