Inventory/Purchasing Questions

1. Inventory/PurchasingQuestions “Top Secret”

2. 1.Which of the following is NOT one of the five purposes that inventory serves? • Prevents economies of scale • Balances supply and demand • Enables specialization in manufacturing • Provides protection from uncertainties in demand and order cycle time • Acts as a buffer between critical interfaces within the supply chain

3. 1.Which of the following is NOT one of the five purposes that inventory serves? • Prevents economies of scale • Balances supply and demand • Enables specialization in manufacturing • Provides protection from uncertainties in demand and order cycle time • Acts as a buffer between critical interfaces within the supply chain

4. 2.Variability in demand increases safety stock. • True • False

5. 2.Variability in demand increases safety stock. • True • False

6. 3.Speculative stock is held in inventory because of… • Demand uncertainty • Forecasted price increases • Variability in lead times • Manufacturing requirements

7. 3.Speculative stock is held in inventory because of… • Demand uncertainty • Forecasted price increases • Variability in lead times • Manufacturing requirements

8. 4.Seasonal stock is used to prevent stockouts. • True • False

9. 4.Seasonal stock is used to prevent stockouts. • True • False

10. 5. Dead stock is… • Ready to be shipped • Being held for extended periods of time • The same as safety stock • Stock that is obsolete

11. 5. Dead stock is… • Ready to be shipped • Being held for extended periods of time • The same as safety stock • Stock that is obsolete

12. 6. The economic order quantity model (EOQ)… • Eliminates inventory carrying costs • Maximizes output • Minimizes the total of inventory carrying costs and ordering costs • Has no effect on inventory carrying costs

13. 6. The economic order quantity model (EOQ)… • Eliminates inventory carrying costs • Maximizes output • Minimizes the total of inventory carrying costs and ordering costs • Has no effect on inventory carrying costs

14. 7. Which of the following does NOT influence forecasting accuracy? • Economic conditions • Competitive actions • Changes in government regulations • Market shifts • All of the above influence forecasting accuracy

15. 7. Which of the following does NOT influence forecasting accuracy? • Economic conditions • Competitive actions • Changes in government regulations • Market shifts • All of the above influence forecasting accuracy

16. 8. ______ represents the magnitude of a stockout. • Fill rate • EOQ • Replenishment cycle • Fixed Order Interval Model

17. 8. ______ represents the magnitude of a stockout. • Fill rate • EOQ • Replenishment cycle • Fixed Order Interval Model

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

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

20. 10. In a fixed-quantity arrangement, orders are triggered by a time. • True • False

21. 10. In a fixed-quantity arrangement, orders are triggered by a time. • True • False

22. 11. Which of the following is not a goal of purchasing? • Keep inventory investment and loss at a minimum • Find or develop competent suppliers • Forecast accurate demand for materials purchased • Purchase items and services at lowest total cost

23. 11. Which of the following is not a goal of purchasing? • Keep inventory investment and loss at a minimum • Find or develop competent suppliers • Forecast accurate demand for materials purchased • Purchase items and services at lowest total cost

24. 12. In the acquisition process, the most important activity is thought to be… • Purchasing the right quantity • Selecting the best supplier • Purchasing materials and services at lowest cost • Minimize lead time

25. 12. In the acquisition process, the most important activity is thought to be… • Purchasing the right quantity • Selecting the best supplier • Purchasing materials and services at lowest cost • Minimize lead time

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

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

28. 14. Supplier certification is thought to be better than inspection programs. • True • False

29. 14. Supplier certification is thought to be better than inspection programs. • True • False

30. 15. Just in time is… • A specific method of managing inventory • More of a philosophy of doing business • Uses detailed specifications • Promotes safety stock

31. 15. Just in time is… • A specific method of managing inventory • More of a philosophy of doing business • Uses detailed specifications • Promotes safety stock

32. 16. Which of the following is not an important part of JIT? • Safety Stock • Buyer/Supplier Communication • Purchaser/Supplier relationship • All of the above are important parts of JIT

33. 16. Which of the following is not an important part of JIT? • Safety Stock • Buyer/Supplier Communication • Purchaser/Supplier relationship • All of the above are important parts of JIT

34. 17. Which of the following is not an issue related to supplier selection? • Quality control methods • Supplier proximity • Manufacturing flexibility • Lead time reliability • All of the above are issues related to supplier selection

35. 17. Which of the following is not an issue related to supplier selection? • Quality control methods • Supplier proximity • Manufacturing flexibility • Lead time reliability • All of the above are issues related to supplier selection

36. 18. JIT manufacturers and their suppliers generally have short term contracts • True • False

37. 18. JIT manufacturers and their suppliers generally have short term contracts • True • False

38. 19. Which of the following is not a benefit of JIT? • Lower inventory carrying costs • Production levels are relatively level • Demand for materials is more predictable • Increased sales

39. 19. Which of the following is not a benefit of JIT? • Lower inventory carrying costs • Production levels are relatively level • Demand for materials is more predictable • Increased sales

40. 20. An In-Plant Representative… • Is a supplier in the buying company’s office • Often replaces a purchaser, planner, and a salesperson • Is associated with JIT II • All of the above

41. 20. An In-Plant Representative… • Is a supplier in the buying company’s office • Often replaces a purchaser, planner, and a salesperson • Is associated with JIT II • All of the above

42. 21. Typical Criteria to use in identifying critical purchases are… • Percentage of product cost • Percentage of total purchase expenditure • Use on high-margin end items • A and C • All of the above

43. 21. Typical Criteria to use in identifying critical purchases are… • Percentage of product cost • Percentage of total purchase expenditure • Use on high-margin end items • A and C • All of the above

44. 22. All of the following are ways to reduce inventory levels except… • Lead time analysis • Measurement of fill rate by SKU • Eliminating high turnover • Analysis of customer demand characteristics • All of the above

45. 22. All of the following are ways to reduce inventory levels except… • Lead time analysis • Measurement of fill rate by SKU • Eliminating high turnover • Analysis of customer demand characteristics • All of the above

46. 23. All of the following are symptoms of poor inventory management except… • Decreasing number of backorders • Increasing number of orders being canceled • Large quantities of obsolete items • Wide variance in inventory turnover • All of the above

47. 23. All of the following are symptoms of poor inventory management except… • Decreasing number of backorders • Increasing number of orders being canceled • Large quantities of obsolete items • Wide variance in inventory turnover • All of the above

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

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

50. 25. Many companies use ERP systems to improve… • Materials management • Plant management • Quality management • Production planning and control • All of the above