Working Capital Quiz-Part 2

What is the optimal quantity of stock to order that minimizes the total inventory costs?

• EOQ (Economic Order Quantity)

• ABC Analysis

• Just-in-Time (JIT) Delivery

• FIFO/LIFO Valuation

What does ABC analysis classify inventory into?

• A: High-value, B: Medium-value, C: Low-value

• A: Low-value, B: Medium-value, C: High-value

• A: Medium-value, B: High-value, C: Low-value

• A: High-value, B: Low-value, C: Medium-value

What is the formula for Re-order Point (ROP)?

• (Average daily usage × Lead time) + Safety stock

• Average daily usage + Lead time + Safety stock

• Average daily usage × Lead time - Safety stock

• Lead time / Average daily usage + Safety stock

What is Safety Stock?

• Extra inventory kept to prevent stockouts

• Inventory that is sold first

• Inventory that is ordered last

• Inventory that is not used

What is the primary purpose of Just-in-Time (JIT) inventory management?

• To reduce inventory holding costs

• To increase production speed

• To enhance product quality

• To simplify supply chain logistics

Which inventory valuation method assumes that the oldest inventory items are sold first?

• Weighted Average Cost

• LIFO (Last-In, First-Out)

• FIFO (First-In, First-Out)

• Specific Identification

Which of the following is a key characteristic of a Just-in-Time (JIT) inventory system?

• Large stockpiles of inventory

• Frequent deliveries of small quantities

• Long lead times for orders

• Minimal supplier interaction

Which inventory valuation method assumes that the oldest inventory items are sold first?

• Weighted Average Cost

• LIFO (Last-In, First-Out)

• FIFO (First-In, First-Out)

• Specific Identification

What is the role of lead time in inventory management?

• It has no impact on inventory management

• It determines the maximum inventory level

• It affects the re-order point calculation

• It influences the safety stock amount

What is the primary function of a safety stock in inventory management?

• To increase overall inventory levels

• To ensure product availability during demand fluctuations

• To reduce lead times

• To minimize storage costs