Chap12_MC_Questions&Answers

Chap12_MC_Questions&Answers - Chapter 12: Multiple...

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1 Chapter 12: Multiple Choice Questions 1. Which of the following is a function of inventory? 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 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 3. All of the following statements about ABC analysis are true except a. inventory may be categorized by measures other than dollar volume b. it categorizes on-hand inventory into three groups based on annual dollar volume c. it is an application of the Pareto principle d. it states that all items require the same degree of control e. it states that there are the critical few and the trivial many inventory items 4. ABC analysis is based upon the principle that a. all items in inventory must be monitored very closely b. there are usually a few critical items, and many items which are less critical c. an item is critical if its usage is high d. the safety stock in terms of volume should be higher for A items than for C items 5. 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. 6. ABC analysis divides on-hand inventory into three classes, generally based upon a. item quality b. unit price c. the number of units on hand d. annual demand e. annual dollar volume 7. Cycle counting a. is a process by which inventory records are verified once a year b. provides a measure of inventory accuracy
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This note was uploaded on 04/14/2011 for the course BUSSINESS 16.391 taught by Professor Micial during the Spring '11 term at Brandon.

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Chap12_MC_Questions&Answers - Chapter 12: Multiple...

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