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1.Which of the following is NOT one of the five purposes that inventory serves?
A. Prevents economies of scale B. Balances supply and demand C. Enables specialization in manufacturing D. Provides protection from uncertainties in demand

and order cycle time E. Acts as a buffer between critical interfaces within the supply chain

2.Variability in demand increases safety stock.

A. True B. False

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3.Speculative stock is held in inventory because of

A. Demand uncertainty B. Forecasted price increases C. Variability in lead times D. Manufacturing requirements

4.Seasonal stock is used to prevent stockouts.

A. True B. False

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5. Dead stock is
A. Ready to be shipped B. Being held for extended periods of time C. The same as safety stock D. Stock that is obsolete

6. The economic order quantity model (EOQ)

A. Eliminates inventory carrying costs B. Maximizes output C. Minimizes the total of inventory carrying costs and

ordering costs D. Has no effect on inventory carrying costs

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7. Which of the following does NOT influence forecasting accuracy?

A. Economic conditions B. Competitive actions C. Changes in government regulations D. Market shifts E. All of the above influence forecasting accuracy

8. ______ represents the magnitude of a stockout.

A. Fill rate B. EOQ C. Replenishment cycle D. Fixed Order Interval Model

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9. The Fixed Order Interval Model is used when orders must be placed at fixed time intervals.
A. True B. False

10. In a fixed-quantity arrangement, orders are triggered by a time.

A. True B. False

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11. Which of the following is not a goal of purchasing?

A. Keep inventory investment and loss at a minimum B. Find or develop competent suppliers C. Forecast accurate demand for materials purchased D. Purchase items and services at lowest total cost

12. In the acquisition process, the most important activity is thought to be

A. Purchasing the right quantity B. Selecting the best supplier C. Purchasing materials and services at lowest cost D. Minimize lead time

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13. Which of the following is NOT a major product category that is purchased by most companies?
A. Component parts B. Raw materials C. Operating supplies D. Process equipment E. All of the above are major categories purchased by

most companies

14. Supplier certification is thought to be better than inspection programs.

A. True B. False

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15. Just in time is

A. A specific method of managing inventory B. More of a philosophy of doing business C. Uses detailed specifications D. Promotes safety stock

16. Which of the following is not an important part of JIT?

A. Safety Stock B. Buyer/Supplier Communication C. Purchaser/Supplier relationship D. All of the above are important parts of JIT

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17. Which of the following is not an issue related to supplier selection?

A. Quality control methods B. Supplier proximity C. Manufacturing flexibility D. Lead time reliability E. All of the above are issues related to supplier selection

18. JIT manufacturers and their suppliers generally have short term contracts
A. True B. False

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19. Which of the following is not a benefit of JIT?

A. Lower inventory carrying costs B. Production levels are relatively level C. Demand for materials is more predictable D. Increased sales

20. An In-Plant Representative

A. Is a supplier in the buying companys office B. Often replaces a purchaser, planner, and a

salesperson C. Is associated with JIT II D. All of the above

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21. Typical Criteria to use in identifying critical purchases are

A. Percentage of product cost B. Percentage of total purchase expenditure C. Use on high-margin end items D. A and C E. All of the above

22. All of the following are ways to reduce inventory levels except
A. Lead time analysis B. Measurement of fill rate by SKU C. Eliminating high turnover D. Analysis of customer demand characteristics E. All of the above

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23. All of the following are symptoms of poor inventory management except
A. Decreasing number of backorders B. Increasing number of orders being canceled C. Large quantities of obsolete items D. Wide variance in inventory turnover E. All of the above

24. The idea behind ABC analysis is that 20% of a firms customers or products accounts for 80% of the sales
A. True B. False

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25. Many companies use ERP systems to improve

A. Materials management B. Plant management C. Quality management D. Production planning and control E. All of the above

26. A primary goal of inventory management is to achieve an optimum balance between inventory carrying costs and customer service.
A. True B. False

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27. Cost reduction and cost avoidance programs include all of the following except
A. Supplier development B. Standardization C. Make or Buy analysis D. Increase in inventory

28. Which of the following is not a performance measure?

A. Price effectiveness B. Value analysis C. Material flow control D. Cost savings E. All of the above

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29. System contracts are a means of reducing materials related costs

A. True B. False

30. All of the following are objectives of system contracts and stockless purchasing except
A. Lower inventory levels B. Increase in number of suppliers C. Reduction in administrative cost and paperwork D. Timely delivery of material directly to user E. All of the above

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31. ______ is a physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state.
A. Raw materials B. Work-in-process C. Inventory D. Finished goods

32. Inventory impacts all of the following except

A. Customer Satisfaction B. Logistics activity performance C. Company performance D. Forecasting accuracy E. All of the above are impacted by inventory

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33. Which of the following is not an objective of inventory?

A. Fulfill corporate policies and goals B. Create customer demand C. Minimize total logistics activities D. Promote corporate profitability E. All of the above are objectives of inventory

34. The three types of inventory are

Raw materials Work-in-process Finished goods

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35. Which of the following is not a key decision of inventory?

A. How much to order B. When to order C. Where to hold inventory D. When to substitute transportation for inventory E. All of the above are key decisions of inventory

36. Which of the following is NOT an aspect of inventory that must be managed?
A. Holding costs B. Number of products C. Value analysis D. Lead time E. All of the above are aspects of inventory that must be

managed

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37. All of the following are internal measurements of inventory except

A. Inventory turn B. Selling days on hand C. Backorder level D. Inventory sales to ratio E. All of the above are internal measurements

38. Which of the following is NOT an external measurement of inventory?

A. Customer service level B. Customer delivery quantity C. Customer delivery cycle time D. ABC analysis

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39. All of the following are symptoms of poor inventory management except
A. Decreasing numbers in backorders B. Higher customer turnover rate C. Periodic lack of storage space D. Increasing number of canceled orders E. All of the above are symptoms of poor inventory

management

40. Which of the following is NOT a strategy to manage inventory?

A. ABC analysis B. Real-time visibility C. Inventory models D. Centralized decision making E. All of the above are strategies to manage inventory

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