Question 1

Purchase economies and transportation economies are not complementary.

Accepted Answer

A) True 
 B)False  False

Question 2

In the event of a "stockout," one of the things that could happen is:

Accepted Answer

A)   the vendor's plant shuts down.
B)   the cost of capital is increased.
C)   the SCOR process would come into play.
D)   extra shipping costs may be incurred. D

Question 3

Inventory management is not as important as it once was due to other factors that have come into play.

Accepted Answer

A) True 
 B)False  False

Question 4

Inventory plays a dual role in organizations. Inventory impacts the cost of goods sold as well as supporting the balance sheet, a new concept only recently receiving attention.

Accepted Answer

A) True 
 B)False

Question 5

Discuss capital cost, and include both the hurdle rate and weighted average cost of capital (WACC) in your answer.

Accepted Answer

The answer of Discuss capital cost, and include both the...

Question 6

Discuss how seasonality can affect inventory.

Accepted Answer

The answer of Discuss how seasonality can affect inventory....

Question 7

Assuming that total customer demand remains the same, the square-root rule estimates the extent to which aggregate inventory need will change as an organization increases or decreases the number of stocking locations.

Accepted Answer

A) True 
 B)False

Question 8

The ABC analysis is based on Pareto's law.

Accepted Answer

A) True 
 B)False

Question 9

MRPII will not allow an organization to integrate financial planning with operations and logistics.

Accepted Answer

A) True 
 B)False

Question 10

In comparison with the basic EOQ approach, the fixed interval model does not require close surveillance of inventory levels.

Accepted Answer

A) True 
 B)False

Question 11

ABC analysis uses a single criterion to classify SKUs from most important to least important.

Accepted Answer

A) True 
 B)False

Question 12

The square-root rule is based on a number of reasonable assumptions. Which of the following is not one of these assumptions?

Accepted Answer

A)   Inventory transfers between stocking locations are common practice.
B)   Lead times do not vary, and thus inventory centralization is not affected by inbound supply uncertainty.
C)   Customer service levels, as measured by inventory availability, are constant.
D)   Demand at each location is normally distributed.

Question 13

Storage space costs are not variable.

Accepted Answer

A) True 
 B)False

Question 14

The fixed order interval EOQ model is best used for SKUs with:

Accepted Answer

A)   variable demand.
B)   stable demand.
C)   unknown demand.
D)   seasonal demand.

Question 15

Information technology's impact on inventory has been labeled an exchange of "information for inventory."

Accepted Answer

A) True 
 B)False

Question 16

What is vendor-managed inventory (VMI)?

Accepted Answer

The answer of What is vendor-managed inventory (VMI)?...

Question 17

Batching economies or cycle stocks usually arise from three sources. Which of these is not a source?

Accepted Answer

A)   Procurement
B)   Transportation
C)   Production
D)   Demand

Question 18

Seasonal stocks are not influenced by:

Accepted Answer

A)   EOQ.
B)   weather.
C)   transportation.
D)   holidays.

Question 19

Capital cost focuses on the cost of capital tied up in _____ and the resulting lost opportunity from investing that capital elsewhere.

Accepted Answer

A)   plants
B)   inventory
C)   distribution centers
D)   WIP

Question 20

How can inventory carrying cost be calculated for a specific product? What suggestions would you offer for determining the measure of product value to be used in this calculation?

Accepted Answer

The answer of How can inventory carrying cost be calculated...

Exam 9: Managing Inventory in the Supply Chain

Purchase economies and transportation economies are not complementary.

In the event of a "stockout," one of the things that could happen is:

Inventory management is not as important as it once was due to other factors that have come into play.

Inventory plays a dual role in organizations. Inventory impacts the cost of goods sold as well as supporting the balance sheet, a new concept only recently receiving attention.

Discuss capital cost, and include both the hurdle rate and weighted average cost of capital (WACC) in your answer.

Discuss how seasonality can affect inventory.

Assuming that total customer demand remains the same, the square-root rule estimates the extent to which aggregate inventory need will change as an organization increases or decreases the number of stocking locations.

The ABC analysis is based on Pareto's law.

MRPII will not allow an organization to integrate financial planning with operations and logistics.

In comparison with the basic EOQ approach, the fixed interval model does not require close surveillance of inventory levels.

ABC analysis uses a single criterion to classify SKUs from most important to least important.

The square-root rule is based on a number of reasonable assumptions. Which of the following is not one of these assumptions?

Storage space costs are not variable.

The fixed order interval EOQ model is best used for SKUs with:

Information technology's impact on inventory has been labeled an exchange of "information for inventory."

What is vendor-managed inventory (VMI)?

Batching economies or cycle stocks usually arise from three sources. Which of these is not a source?

Seasonal stocks are not influenced by:

Capital cost focuses on the cost of capital tied up in _____ and the resulting lost opportunity from investing that capital elsewhere.

How can inventory carrying cost be calculated for a specific product? What suggestions would you offer for determining the measure of product value to be used in this calculation?