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Homework assignment 5:

1. Which of the following is a function of inventory?
a.to decouple or separate parts of the production process
b.to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers
c.to take advantage of quantity discounts
d.to hedge against inflation
e.All of the above are functions of inventory.

2. Which of the following would not generally be a motive for a firm to hold inventories?
a.to decouple or separate parts of the production process
b.to provide a stock of goods that will provide a selection for customers
c.to take advantage of quantity discounts
d.to minimize holding costs
e.All of the above are functions of inventory.

3. Which of the following is not one of the four main types of inventory?
a.raw material inventory
b.work-in-process inventory
c.maintenance/repair/operating supply inventory
d.safety stock inventory
e.Finish goods

4. Which of the following statements about ABC analysis is false?
a.ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings.
b.In ABC analysis, "A" Items are tightly controlled, have accurate records, and receive regular review by major decision makers.
c.In ABC analysis, "C" Items have minimal records, periodic review, and simple controls.
d.ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
e.All of the above statements are true.

5....
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