Inventory Management MCQs
Inventory Management MCQs
Answer these 80+ Inventory Management MCQs and assess your grip on the subject of Inventory Management.
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1: ________ sort items into A, B, and C categories according to criteria such as their unit costs, value, or the annual revenue they generate for a firm
A. ABC classification method
B. Workflow
C. Mixed-model
D. Lean Six Sigma
2: Activity-based costing is a system that accounts for inventory cost and enables companies to recognize the excessive costs
A. True
B. False
3: Inventory held in excess of a firm’s cycle stock to meet the expected increase in demand is known as
A. ABC classification method
B. Anticipation inventory
C. Mixed-model
D. Lean Six Sigma
4: Anticipation inventory is a customer order a company was unable to meet because the item demanded was not in stock
A. True
B. False
5: Why in Bullwhip effect supply chain in close proximity to the consumer (such as a retailer) to order more goods from the immediate upstream supplier to
A. Meet the Quality
B. Meet the Value
C. Meet the demand
D. None of these
6: A specific set of professional behaviors and values including confidentiality, accuracy,that all company employees must know and strictly is known as
A. Code of ethics
B. Continuous review systems
C. Cycle counting
D. Days of inventory in stock
7: ______ a system in which inventory levels of every item in stock, including its quantity and availability, are monitored and updated continuously
A. Code of ethics
B. Continuous review systems
C. Cycle counting
D. Days of inventory in stock
8: Counting a random sample or subset of inventory in stock in a particular location on a specific day. This statement is correct for
A. Code of ethics
B. Continuous review systems
C. Cycle counting
D. Days of inventory in stock
9: The inventory that a company carries to satisfy its normal cycle of sales orders or production requirements is known as
A. Code of ethics
B. Cycle stock
C. Cycle counting
D. Days of inventory in stock
10: Define Days of inventory in stock.
A. The number of days of inventory a firm has on hand to meet its sales
B. A function that enables production to continue temporarily while the production problem at a given process stage is resolved
C. Process whereby an upstream supply chain member such as a manufacturer sells directly to the final consumer
D. The percentage of customer orders that can be satisfied from inventory in stock
11: Decoupling is a function that enables production to _____ while the production problem at a given process stage is resolved
A. Continue temporarily
B. Continue permanently
C. Both a & b
D. None of these
12: _______ is a process whereby an upstream supply chain member such as a manufacturer sells directly to the final consumer
A. Code of ethics
B. Disintermediation
C. Cycle counting
D. Days of inventory in stock
13: The percentage of customer orders that can be satisfied from inventory in stock is known as
A. Fill rate
B. Disintermediation
C. Holding costs
D. Hedge inventory
14: Which type of inventory is purchased in advance to guard against uncertainties in pricing?
A. Fill rate
B. Disintermediation
C. Holding costs
D. Hedge inventory
15: Holding costs associated with holding (carrying) inventory
A. True
B. False
16: ________ measure of how frequently a business sells its inventory in a given time period
A. Fill rate
B. Disintermediation
C. Holding costs
D. Inventory turnover
17: Lost sales occur when a customer doesn’t buy an item if that item is not in stock
A. True
B. False
18: A system in which optimum levels of inventory are determined and updated continuously across the supply chain network based on the demand variability is known as
A. Multi-echelon inventory systems
B. Order fulfillment lead time
C. Ordering costs
D. None of these
19: Order fulfillment lead time is the the average time it takes from the submission of a customer’s purchase order until the company delivers the order
A. Multi-echelon inventory systems
B. Order fulfillment lead time
C. Ordering costs
D. None of these
20: ______ administrative costs related to determining an order quantity, preparing purchase invoices, inspecting goods received for quality and quantity, and moving goods for temporary storage
A. Multi-echelon inventory systems
B. Order fulfillment lead time
C. Ordering costs
D. None of these
21: A system in which inventory is physically counted periodically and all reordering takes place at these intervals is known as
A. Multi-echelon inventory systems
B. Order fulfillment lead time
C. Periodic review systems
D. None of these
22: _______ determining the real quantity of inventory that is physically available on a periodic basis
A. Multi-echelon inventory systems
B. Order fulfillment lead time
C. Periodic review systems
D. Physical count
23: Portfolio planning is a channel alignment strategy in which a company signs _______ with one or two suppliers
A. Medium-term contracts
B. Short-term contracts
C. Small-term contracts
D. Long-term contracts
24: Money paid to an upstream supplier for materials or goods purchased Is known as
A. Purchase costs
B. Radio frequency identification
C. Setup costs
D. Single-echelon inventory systems
25: RFID stands for
A. Request for information
B. Radio frequency identification
C. Final Investment Decision
D. None of these
26: Setup costs the costs of setting up the machines or changing over production from one item to another
A. True
B. False
27: ______ is a system in which each supply chain partner sequentially forecasts demand that invariably leads to the bullwhip effect
A. Single-echelon inventory systems
B. Purchase costs
C. Radio frequency identification
D. Setup costs
28: _______ is the System Ordering the entire inventory of a product at one time and it is not replenished
A. Single-echelon inventory systems
B. Single-period system
C. Radio frequency identification
D. Setup costs
29: In Smoothing inventories inventories held to smooth out fluctuations in production
A. True
B. False
30: Single-echelon inventory systems
A. Stock-out costs
B. Radio frequency identification
C. Setup costs
31: Transportation inventories transit in containers or trucks (also known as pipeline inventories)
A. True
B. False
32: ABC Inventory Classification is an approach used to help companies manage their independent demand inventories.
A. True
B. False
33: Anticipation Inventories can be met ______ of expected high demand
A. During periods
B. After Periods
C. Both a & b
D. None of these
34: Forecasts of demand combined with additions of safety stock that tend to amplify purchases from suppliers is known as _______ .
A. Bullwhip Effect
B. Cycle Inventories
C. Both a & b
D. None of these
35: Cash-to-Cash Cycle Time indicating how ______ is tied up in the main cash- producing and cash- consuming area .
A. Long cash
B. Small cash
C. Medium cash
D. None of these
36: Cycle Inventories created when the firm _______ a quantity large enough to last until the next purchase or production period.
A. Purchases
B. Produces
C. Both a & b
D. None of these
37: Days Payable Outstanding measure that tells about how long it takes a company to pay its creditors, such as suppliers .
A. True
B. False
38: An inventory performance measure that indicates the average number of days it takes a company to collect is known as _____ .
A. Days of Receivables Outstanding
B. Days Payable Outstanding
C. Dependent Demand
D. ALL OF THESE
39: Dependent demand required to build end-items and are dependent on the ________ of the finished product .
A. Internal demand
B. Executable demand
C. External demand
D. Both b & c
40: The order quantity that will minimize the sum of the annual inventory holding cost and the annual order cost is known as ______ .
A. Economic Order Quantity
B. Finished Goods
C. Hedge Inventories
D. None of these
41: Finished Goods completed products ready for delivery to ______ .
A. CEO
B. Employee
C. Customers
D. None of these
42: Hedge inventories used when companies stockpile inventories to protect against ______ or supply shortages
A. Price increases
B. Price decreases
C. Both a & b
D. None of these
43: Independent Demand is the external demand for a firm’s finished products
A. True
B. False
44: The costs associated with storing inventories is known as ______ .
A. Inventory Carrying Costs
B. Inventory Days of Supply
C. Inventory Management Performance
D. None of these
45: Inventory Days of Supply is an inventory performance measure that tells management how long inventory is held before it is sold.
A. True
B. False
46: ________ measures of how well companies are creating good customer service while keeping inventories low.
A. Inventory Carrying Costs
B. Inventory Days of Supply
C. Inventory Management Performance
D. None of these
47: Maintenance, repair, and operating supplies is defined as purchased items consumed in-house or used to support _______ .
A. Manufacturing
B. Service processes
C. Both a & b
D. None of these
48: Optimal review period used for the periodic review model.
A. True
B. False
49: The administrative costs associated with purchasing items is known as _______ .
A. Order Costs
B. Order Lead Time
C. Periodic Review Model
D. None of these
50: The time from order receipt to delivery to the customer is known as _______
A. Order Costs
B. Order Lead Time
C. Periodic Review Model
D. None of these
51: Periodic review model requires ________ stock levels than the reorder point models.
A. Higher safety
B. Normal safety
C. Lowest safety
D. None of these
52: EOQ stands for _____ .
A. Economic order quantity
B. Energy optimizing quantum
C. Energy on time
D. None of these
53: Which model assumes the purchase lead time to be constant; however, the time between orders would vary ?
A. Probabilistic Demand Reorder Point Model
B. Quantity Discount Model
C. Periodic Review Model
D. None of these
54: The actual cost of the items bought from suppliers is known as ______
A. Purchase Cost
B. Buying cost
C. Salling cost
D. Both a & b
55: The actual cost of the items bought from suppliers is known as ______
A. Purchase Cost
B. Buying cost
C. Salling cost
D. Both a & b
56: Quantity Discount Model used when the purchase price is allowed to vary—for instance, when quantity discounts are offered by a supplier Raw Materials.
A. True
B. False
57: The inventory on-hand needed to satisfy demand during the order lead time period is known as _____ .
A. Reorder Point
B. Robust Model
C. Safety Stocks
D. Both a & b
58: Robust model refers to the flatness of the ________ curve, which means the EOQ model can be used in a variety of situations.
A. Total inventory cost
B. Fifty percent inventory cost
C. Twenty-five percent inventory cost
D. None of these
59: Safety Stocks are held to satisfy demand when delivery or production problems occur, or when demand is higher than expected .
A. True
B. False
60: Service Level is the ______ of time the firm does not want to stockout during the order lead time period.
A. Percentage
B. Total
C. 50 %
D. None of these
61: Stockout Costs is encountered when the _______ for items cannot be met
A. Internal demand
B. External demand
C. Both a & b
D. None of these
62: Target Inventory Level is the order-up-to level when using the periodic review model .
A. True
B. False
63: The sum of the annual inventory carrying costs, order costs, stockout costs, and purchase costs is known as _______ .
A. Total Annual Inventory Costs
B. Transportation Inventories
C. Work-in-Process
D. Assembly Line Layouts
64: These inventories are owned by the firm and are in-transit either in-bound to the firm or out-bound to the firm’s customers is known as ______ .
A. Total Annual Inventory Costs
B. Transportation Inventories
C. Work-in-Process
D. Assembly Line Layouts
65: Work-in-Process is an item in some intermediate stage of processing by
A. The firm .
B. True
C. False
66: Understanding the correct symbol to use to represent an action or activity in material flow mapping is essential. Which symbol is used to indicate information flow?
A. Rounded rectangle
B. Triangle
C. Solid arrow
D. Dashed arrow
67: Understanding the correct symbol to use to represent an action or activity in material flow mapping is essential. Which symbol is used to indicate the start or end of a process?
A. Rounded rectangle
B. Triangle
C. Solid arrow
D. Dashed arrow
68: Understanding the correct symbol to use to represent an action or activity in material flow mapping is essential. Which symbol is used to indicate a delay or storage?
A. Rounded rectangle
B. Triangle
C. Solid arrow
D. Dashed arrow
69: What is another term used to describe material flow mapping?
A. Process mapping
B. Process flowcharting
C. Value stream mapping
D. All of the above
70: When discussing the TOC, _______ refers to the control or scheduling of work releases to the facility.
A. Drum
B. Buffer
C. Rope
D. Bottleneck
71: When discussing the TOC, the term _______ represents the work center that sets the pace for the entire facility.
A. Drum
B. Buffer
C. Rope
D. Bottleneck
72: The use of a computer graphics applications in product design is called _______.
A. Computer numerically controlled machines (CNC)
B. Computer aided design (CAD)
C. Computer aided manufacturing (CAM)
D. Computer integrated manufacturing (CIM)
73: _______ is used to manage the entire product design system including planning, scheduling, and decision-making.
A. A computer numerically controlled machine (CNC)
B. Computer aided design (CAD)
C. Computer aided manufacturing (CAM)
D. Computer integrated manufacturing (CIM)
74: _______ is a programmable machine capable of storing machining steps for repetitively manufactured parts.
A. A computer numerically controlled machine (CNC)
B. Computer aided design (CAD)
C. Computer aided manufacturing (CAM)
D. Computer integrated manufacturing (CIM)
75: Cellular layouts are an example of which of the following?
A. Product-focused layouts
B. Process-focused layouts
C. Group technology layouts
D. Project layouts
76: Assembly line layouts are examples of which of the following?
A. Product-focused layouts
B. Process-focused layouts
C. Group technology layouts
D. Project layouts
77: Machine shop layouts are examples of which of the following?
A. Product-focused layouts
B. Process-focused layouts
C. Group technology layouts
D. Project layouts
78: This type of layout enables high-volume output while making standardized products:
A. Product-focused layout
B. Process-focused layout
C. Group technology layout
D. Project layout
79: A closeness desirability rating is used in which type of layout?
A. Fixed-position layout
B. Office layout
C. Retail layout
D. Servicescape
80: Focal points that are added to center-aisle locations are known as _______.
A. Servicescapes
B. Sight lines
C. Visual merchandising
D. Micro-merchandising
81: When it comes to right-of-way, ""first in, first out"" means _____.
A. The first road user at an intersection does not have to check for cross traffic
B. The first road user at an intersection must leave as quickly as possible
C. Yield to any road users who arrived before you
D. Yield to the first road user who arrives after you
82: ____________ is an example of a retailer whose merchandise mix is both wide and deep?
A. A farmers' market
B. City Lights Bookstore
C. Sunglass Hut
D. Costco
E. Amazon
83: Experts advise that bad news for employees should be delivered __________ whenever possible.
A. In person
B. Via digital media.
C. By courier.
D. Via certified mail
84: The retailer can _____ to liquidate markdown merchandise.
A. Sell merchandise over an online auction
B. Horizontal Price Fixing
C. Self Selected Variable Pricing
D. Price Lining
85: Short-sea shipping is widely accepted and practiced in ____.
A. North America
B. South America
C. Europe
D. Asia
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