inventory/purchasing questions

“Top Secret”

1.Which of the following is NOT one of the five purposes that inventory serves?A. Prevents economies of scaleB. Balances supply and demandC. Enables specialization in manufacturingD. Provides protection from uncertainties in

demand and order cycle timeE. Acts as a buffer between critical interfaces

within the supply chain

1.Which of the following is NOT one of the five purposes that inventory serves?A. Prevents economies of scaleB. Balances supply and demandC. Enables specialization in manufacturingD. Provides protection from uncertainties in

demand and order cycle timeE. Acts as a buffer between critical interfaces

within the supply chain

2.Variability in demand increases safety stock.A. TrueB. False

2.Variability in demand increases safety stock.A. TrueB. False

3.Speculative stock is held in inventory because of…A. Demand uncertaintyB. Forecasted price increasesC. Variability in lead timesD. Manufacturing requirements

3.Speculative stock is held in inventory because of…A. Demand uncertaintyB. Forecasted price increasesC. Variability in lead timesD. Manufacturing requirements

4.Seasonal stock is used to prevent stockouts.A. TrueB. False

4.Seasonal stock is used to prevent stockouts.A. TrueB. False

5. Dead stock is…A. Ready to be shippedB. Being held for extended periods of timeC. The same as safety stockD. Stock that is obsolete

5. Dead stock is…A. Ready to be shippedB. Being held for extended periods of timeC. The same as safety stockD. Stock that is obsolete

6. The economic order quantity model (EOQ)…A. Eliminates inventory carrying costsB. Maximizes outputC. Minimizes the total of inventory carrying

costs and ordering costsD. Has no effect on inventory carrying costs

6. The economic order quantity model (EOQ)…A. Eliminates inventory carrying costsB. Maximizes outputC. Minimizes the total of inventory carrying

costs and ordering costsD. Has no effect on inventory carrying costs

7. Which of the following does NOT influence forecasting accuracy?A. Economic conditionsB. Competitive actionsC. Changes in government regulationsD. Market shiftsE. All of the above influence forecasting

accuracy

7. Which of the following does NOT influence forecasting accuracy?A. Economic conditionsB. Competitive actionsC. Changes in government regulationsD. Market shiftsE. All of the above influence forecasting

accuracy

8. ______ represents the magnitude of a stockout.A. Fill rateB. EOQC. Replenishment cycleD. Fixed Order Interval Model

8. ______ represents the magnitude of a stockout.A. Fill rateB. EOQC. Replenishment cycleD. Fixed Order Interval Model

9. The Fixed Order Interval Model is used when orders must be placed at fixed time intervals.A. TrueB. False

9. The Fixed Order Interval Model is used when orders must be placed at fixed time intervals.A. TrueB. False

10. In a fixed-quantity arrangement, orders are triggered by a time. A. TrueB. False

10. In a fixed-quantity arrangement, orders are triggered by a time. A. TrueB. False

11. Which of the following is not a goal of purchasing?A. Keep inventory investment and loss at a

minimumB. Find or develop competent suppliersC. Forecast accurate demand for materials

purchasedD. Purchase items and services at lowest total

cost

11. Which of the following is not a goal of purchasing?A. Keep inventory investment and loss at a

minimumB. Find or develop competent suppliersC. Forecast accurate demand for materials

purchasedD. Purchase items and services at lowest total

cost

12. In the acquisition process, the most important activity is thought to be…A. Purchasing the right quantityB. Selecting the best supplierC. Purchasing materials and services at lowest

costD. Minimize lead time

12. In the acquisition process, the most important activity is thought to be…A. Purchasing the right quantityB. Selecting the best supplierC. Purchasing materials and services at lowest

costD. Minimize lead time

13. Which of the following is NOT a major product category that is purchased by most companies?A. Component partsB. Raw materialsC. Operating suppliesD. Process equipmentE. All of the above are major categories

purchased by most companies

13. Which of the following is NOT a major product category that is purchased by most companies?A. Component partsB. Raw materialsC. Operating suppliesD. Process equipmentE. All of the above are major categories

purchased by most companies

14. Supplier certification is thought to be better than inspection programs.A. TrueB. False

14. Supplier certification is thought to be better than inspection programs.A. TrueB. False

15. Just in time is…A. A specific method of managing inventoryB. More of a philosophy of doing business C. Uses detailed specificationsD. Promotes safety stock

15. Just in time is…A. A specific method of managing inventoryB. More of a philosophy of doing business C. Uses detailed specificationsD. Promotes safety stock

16. Which of the following is not an important part of JIT?A. Safety StockB. Buyer/Supplier CommunicationC. Purchaser/Supplier relationshipD. All of the above are important parts of JIT

16. Which of the following is not an important part of JIT?A. Safety StockB. Buyer/Supplier CommunicationC. Purchaser/Supplier relationshipD. All of the above are important parts of JIT

17. Which of the following is not an issue related to supplier selection?A. Quality control methodsB. Supplier proximityC. Manufacturing flexibilityD. Lead time reliabilityE. All of the above are issues related to

supplier selection

17. Which of the following is not an issue related to supplier selection?A. Quality control methodsB. Supplier proximityC. Manufacturing flexibilityD. Lead time reliabilityE. All of the above are issues related to

supplier selection

18. JIT manufacturers and their suppliers generally have short term contractsA. TrueB. False

18. JIT manufacturers and their suppliers generally have short term contractsA. TrueB. False

19. Which of the following is not a benefit of JIT?A. Lower inventory carrying costsB. Production levels are relatively levelC. Demand for materials is more predictableD. Increased sales

19. Which of the following is not a benefit of JIT?A. Lower inventory carrying costsB. Production levels are relatively levelC. Demand for materials is more predictableD. Increased sales

20. An In-Plant Representative…A. Is a supplier in the buying company’s officeB. Often replaces a purchaser, planner, and a

salespersonC. Is associated with JIT IID. All of the above

20. An In-Plant Representative…A. Is a supplier in the buying company’s officeB. Often replaces a purchaser, planner, and a

salespersonC. Is associated with JIT IID. All of the above

21. Typical Criteria to use in identifying critical purchases are… A. Percentage of product costB. Percentage of total purchase expenditureC. Use on high-margin end itemsD. A and CE. All of the above

21. Typical Criteria to use in identifying critical purchases are… A. Percentage of product costB. Percentage of total purchase expenditureC. Use on high-margin end itemsD. A and CE. All of the above

22. All of the following are ways to reduce inventory levels except… A. Lead time analysisB. Measurement of fill rate by SKUC. Eliminating high turnover D. Analysis of customer demand characteristicsE. All of the above

22. All of the following are ways to reduce inventory levels except… A. Lead time analysisB. Measurement of fill rate by SKUC. Eliminating high turnover D. Analysis of customer demand characteristicsE. All of the above

23. All of the following are symptoms of poor inventory management except…

A. Decreasing number of backordersB. Increasing number of orders being canceledC. Large quantities of obsolete itemsD. Wide variance in inventory turnoverE. All of the above

23. All of the following are symptoms of poor inventory management except…

A. Decreasing number of backordersB. Increasing number of orders being canceledC. Large quantities of obsolete itemsD. Wide variance in inventory turnoverE. All of the above

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

A. TrueB. False

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

A. TrueB. False

25. Many companies use ERP systems to improve…A. Materials managementB. Plant managementC. Quality managementD. Production planning and controlE. All of the above

25. Many companies use ERP systems to improve…A. Materials managementB. Plant managementC. Quality managementD. Production planning and controlE. All of the above

26. A primary goal of inventory management is to achieve an optimum balance between inventory carrying costs and customer service.

A. TrueB. False

26. A primary goal of inventory management is to achieve an optimum balance between inventory carrying costs and customer service.

A. TrueB. False

27. Cost reduction and cost avoidance programs include all of the following except…

A. Supplier developmentB. StandardizationC. Make or Buy analysisD. Increase in inventory

27. Cost reduction and cost avoidance programs include all of the following except…

A. Supplier developmentB. StandardizationC. Make or Buy analysisD. Increase in inventory

28. Which of the following is not a performance measure?A. Price effectivenessB. Value analysisC. Material flow controlD. Cost savingsE. All of the above

28. Which of the following is not a performance measure?A. Price effectivenessB. Value analysisC. Material flow controlD. Cost savingsE. All of the above

29. System contracts are a means of reducing materials related costs A. TrueB. False

29. System contracts are a means of reducing materials related costs A. TrueB. False

30. All of the following are objectives of system contracts and stockless purchasing except…

A. Lower inventory levelsB. Increase in number of suppliersC. Reduction in administrative cost and

paperworkD. Timely delivery of material directly to userE. All of the above

30. All of the following are objectives of system contracts and stockless purchasing except…

A. Lower inventory levelsB. Increase in number of suppliersC. Reduction in administrative cost and

paperworkD. Timely delivery of material directly to userE. All of the above

31. ______ is a physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state.A. Raw materialsB. Work-in-processC. InventoryD. Finished goods

31. ______ is a physical resource that a firm holds in stock with the intent of selling it or transforming it into a more valuable state.A. Raw materialsB. Work-in-processC. InventoryD. Finished goods

32. Inventory impacts all of the following except…A. Customer SatisfactionB. Logistics activity performanceC. Company performance D. Forecasting accuracyE. All of the above are impacted by inventory

32. Inventory impacts all of the following except…A. Customer SatisfactionB. Logistics activity performanceC. Company performance D. Forecasting accuracyE. All of the above are impacted by inventory

33. Which of the following is not an objective of inventory? A. Fulfill corporate policies and goalsB. Create customer demandC. Minimize total logistics activitiesD. Promote corporate profitabilityE. All of the above are objectives of inventory

33. Which of the following is not an objective of inventory? A. Fulfill corporate policies and goalsB. Create customer demandC. Minimize total logistics activitiesD. Promote corporate profitabilityE. All of the above are objectives of inventory

34. The three types of inventory are…

34. The three types of inventory are…Raw materialsWork-in-processFinished goods

35. Which of the following is not a key decision of inventory?A. How much to orderB. When to orderC. Where to hold inventoryD. When to substitute transportation for

inventoryE. All of the above are key decisions of

inventory

35. Which of the following is not a key decision of inventory?A. How much to orderB. When to orderC. Where to hold inventoryD. When to substitute transportation for

inventoryE. All of the above are key decisions of

inventory

36. Which of the following is NOT an aspect of inventory that must be managed?A. Holding costsB. Number of productsC. Value analysisD. Lead timeE. All of the above are aspects of inventory

that must be managed

36. Which of the following is NOT an aspect of inventory that must be managed?A. Holding costsB. Number of productsC. Value analysisD. Lead timeE. All of the above are aspects of inventory

that must be managed

37. All of the following are internal measurements of inventory except…A. Inventory turnB. Selling days on handC. Backorder levelD. Inventory sales to ratioE. All of the above are internal measurements

37. All of the following are internal measurements of inventory except…A. Inventory turnB. Selling days on handC. Backorder levelD. Inventory sales to ratioE. All of the above are internal measurements

38. Which of the following is NOT an external measurement of inventory?A. Customer service levelB. Customer delivery quantityC. Customer delivery cycle timeD. ABC analysis

38. Which of the following is NOT an external measurement of inventory?A. Customer service levelB. Customer delivery quantityC. Customer delivery cycle timeD. ABC analysis

39. All of the following are symptoms of poor inventory management except…A. Decreasing numbers in backordersB. Higher customer turnover rateC. Periodic lack of storage spaceD. Increasing number of canceled ordersE. All of the above are symptoms of poor

inventory management

39. All of the following are symptoms of poor inventory management except…A. Decreasing numbers in backordersB. Higher customer turnover rateC. Periodic lack of storage spaceD. Increasing number of canceled ordersE. All of the above are symptoms of poor

inventory management

40. Which of the following is NOT a strategy to manage inventory?A. ABC analysisB. Real-time visibilityC. Inventory modelsD. Centralized decision makingE. All of the above are strategies to manage

inventory

40. Which of the following is NOT a strategy to manage inventory?A. ABC analysisB. Real-time visibilityC. Inventory modelsD. Centralized decision makingE. All of the above are strategies to manage

inventory