Inventory Management Practice Questions

Which cost will typically increase when ordering a larger material quantity?

• Setup costs

• Ordering costs

• Carrying costs

• Transportation costs per hundred weight

A component assigned a unique and permanent location within a zoned warehouse for serial controlled materials is using what type of stock location system:

• Fixed

• Hybrid

• Random

• Floating

All of the following are sources of demand variability except for:

• Competition

• Forecast errors

• Seasonal effects

• Introduction of new products

What is the best goal of a supply chain implementation integration strategy?

• Create a flexible strategic plan

• Meet the needs of all participants

• Meet the needs of the channel master

• Meet the budget plan and time frame

What is the best advantage of using the Pareto diagram to identify process issues?

• Use it to resolve root causes

• Rank attributes by occurrences

• Eliminate the majority of problems by focusing on a small number of causes

• Eliminate major causes by focusing on a large number of problems

A company that has implemented a distribution center (DC) replacement collaboration program will do all of the following with its distribution partners except for:

• Joint forecasting

• Issue orders jointly

• Joint store clustering

• Mutually support order generation

What term refers to a solution to a problem that is best from a narrow point of view but not from a higher or overall company point of view?

• Optimization

• Suboptimization

• Over optimization

• Exception management

The extent to which inventory information is shared within a firm and with supply chain partners is called?

• Inventory velocity

• Inventory visibility

• Inventory optimization

• Inventory management

The MIP Company shipped a container of custom-made machine parts to South America. The average in-transit time is 20 days. The annual demand of this product is 12,000 units. What is the in-transit inventory?

• 61 units

• 200 units

• 329 units

• 658 units

Which of the following wouldn't be considered a stockout cost?

• Layoff costs

• Lost sale costs

• Price reduction costs

• Premium freight costs