Inventory Management Question Bank

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Chapter 12
Inventory Management
 
 Multiple Choice Questions
 
60. Which of the following is not one of the assumptions of the basic EOQ model? 
A. Annual demand requirements are known and constant.
B. Lead time does not vary.
C. Each order is received in a single delivery.
D. Quantity discounts are available.
E. All of the above are necessary assumptions.  


Difficulty: Medium
TLO: 6
Taxonomy: Knowledge
 
61. Which is an application for RFID tags? 
A. Monitoring the temperature of fruit during shipment
B. Measuring the urine output of hospital patients
C. Adjusting medications for diabetics
D. Assessing audience response to a new movie
E. Estimating the results of a political election  


AACSB: IT
Difficulty: Hard
TLO: 1
Taxonomy: Knowledge
 

62. A non-linear cost related to order size is the cost of: 
A. interest
B. insurance
C. taxes
D. receiving
E. space  

Difficulty: Hard
TLO: 6
Taxonomy: Knowledge
 
63. In a two-bin inventory system, the amount contained in the second bin is equal to the: 
A. ROP
B. EOQ
C. amount in the first bin
D. optimum stocking level
E. safety stock  

Difficulty: Medium
TLO: 9
Taxonomy: Knowledge
 
64. When carrying costs are stated as a percentage of unit price, the minimum points on the total cost curves: 
A. Line up
B. Equal zero
C. Do not line up
D. Cannot be calculated
E. Depend on the percentage assigned  


Difficulty: Hard
TLO: 8
Taxonomy: Knowledge
 

65. Dairy items, fresh fruit and newspapers are items that: 
A. do not require safety stocks
B. cannot be ordered in large quantities
C. are subject to deterioration and spoilage
D. require that prices be lowered every two days
E. have minimal holding costs  


Difficulty: Medium
TLO: 6
Taxonomy: Knowledge
 
66. Which is not included in order costs? 
A. processing vendor invoices for payment
B. moving delivered goods to temporary storage
C. inspecting incoming goods for quantity
D. taking an inventory to determine how much is needed
E. temporary storage of delivered goods  


Difficulty: Hard
TLO: 6
Taxonomy: Knowledge
 
67. In an A-B-C system, the typical percentage of the number of items in inventory for A items is about: 
A. 10
B. 30
C. 50
D. 70
E. 90  

Difficulty: Easy
TLO: 5
Taxonomy: Knowledge
 

68. In the A-B-C classification system, items which account for fifteen percent of the total dollar-volume for a majority of the inventory items would be classified as: 
A. A items
B. B items
C. C items
D. A items plus B items
E. B items plus C items  


Difficulty: Easy
TLO: 5
Taxonomy: Knowledge
 
69. In the A-B-C classification system, items which account for sixty percent of the total dollar-volume for few inventory items would be classified as: 
A. A items
B. B items
C. C items
D. A items plus B items
E. B items plus C items  


Difficulty: Easy
TLO: 5
Taxonomy: Knowledge
 
70. The purpose of "cycle counting" is to: 
A. count all the items in inventory
B. count bicycles and motorcycles in inventory
C. reduce discrepancies between inventory records and actual
D. reduce theft
E. count 10% of the items each month  


Difficulty: Easy
TLO: 1
Taxonomy: Knowledge
 

71. The EOQ model is most relevant for which one of the following? 
A. ordering items with dependent demand
B. determination of safety stock
C. ordering perishable items
D. determining fixed interval order quantities
E. determining fixed order quantities  


Difficulty: Medium
TLO: 6
Taxonomy: Knowledge
 
72. Which is not a true assumption in the EOQ model? 
A. Production rate is constant
B. Lead time doesn't vary
C. No more than 3 items are involved
D. Usage rate is constant
E. No quantity discounts  


Difficulty: Hard
TLO: 6
Taxonomy: Knowledge
 
73. In a supermarket, a vendor's restocking the shelves every Monday morning is an example of: 
A. safety stock replenishment
B. economic order quantities
C. reorder points
D. fixed order interval
E. blanket ordering  


Difficulty: Medium
TLO: 3
Taxonomy: Knowledge
 

74. A cycle count program will...
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