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Chapter 12 Inventory Management Chapter 12 Inventory Management TRUE/FALSE 1. Inventory management is the planning and controlling of inventories in order to meet the competitive priorities of the organization. Answer: True Reference: Introduction Difficulty: Easy Keywords: inventory management, planning, controlling 2. When looking at inventory management, the term lot size refers to the physical dimensions of the area where the inventory is stored. Answer: False Reference: Introduction Difficulty: Easy Keywords: inventory management, lot size 3. When looking at inventory management, the term lot size refers to the quantity of an inventory item management either buys from a supplier or manufactures using internal processes. Answer: True Reference: Introduction Difficulty: Easy Keywords: inventory management, lot size, buys, manufactures 4. A stock-keeping unit (SKU) is an individual item or product that has an identifying code and is held in inventory somewhere along the supply chain. Answer: True Reference: Inventory Management Across The Organization Difficulty: Easy Keywords: SKU, individual item, inventory, identifying code 5. A stock-keeping unit (SKU) is a specially designed container for holding a specific amount of an inventory item somewhere along the supply chain. Answer: False Reference: Inventory Management Across The Organization Difficulty: Easy Keywords: SKU, inventory item, inventory, supply chain 6. ABC analysis is a process for categorizing SKUs according to dollar usage so that managers can focus on items with the highest dollar value. Answer: True Reference: Inventory Management Across The Organization Difficulty: Moderate Keywords: ABC analysis, dollar value Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall 252 Chapter 12 Inventory Management 7. When using ABC analysis, class C SKUs should be reviewed frequently. Answer: False Reference: Inventory Management Across The Organization Difficulty: Moderate Keywords: ABC analysis, class 8. Cycle counting is an inventory-control method whereby storeroom personnel physically count a small percent of the total number of items each day. Answer: True Reference: Inventory Management Across The Organization Difficulty: Moderate Keywords: cycle counting, physical count 9. EOQ should be used if you use a make-to-order strategy and the customer specifies the entire order be delivered in one shipment. Answer: False Reference: Economic Order Quantity Difficulty: Easy Keywords: EOQ, economic order quantity 10. EOQ should be used if you follow a make-to-stock strategy and the item has relatively stable demand. Answer: True Reference: Economic Order Quantity Difficulty: Easy Keywords: EOQ, economic order quantity 11. The EOQ is the smallest lot size that a supplier will allow a customer to order.... View Full Document

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