ch13 - File: ch13, Chapter 13: Inventory Management...

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File: ch13, Chapter 13: Inventory Management True/False 1. Inventory management is concerned with how much to order and when to order. Ans: True Difficulty: Moderate Feedback: The Elements of Inventory Management 2. Dependent demand items are typically products for use by the final customer. Ans: False Difficulty: Moderate Feedback: The Elements of Inventory Management 3. Dependent demand items consist of component parts or materials used in the production process to produce a final product. . Ans: True Difficulty: Moderate Feedback: The Elements of Inventory Management 4. As the level of inventory increases to provide better customer service quality-related customer service costs decreases. Ans: True Difficulty: Moderate Feedback: Inventory Control Systems 5. The three basic costs associated with inventory are holding costs, ordering costs and shortage costs. Ans: True
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Difficulty: Moderate Feedback: The Elements of Inventory Management 6. Product deterioration, spoilage, breakage, and obsolescence are examples of shortage costs. Ans: False Difficulty: Moderate Feedback: The Elements of Inventory Management 7. Shortage costs are easier to determine than carrying costs or ordering costs. Ans: False Difficulty: Moderate Feedback: The Elements of Inventory Management 8. Continuous inventory systems often incorporate information technology to improve the speed and accuracy of data entry and retrieval. Ans: True Difficulty: Moderate Feedback: Inventory Control Systems 9. The ABC classification system is a method for classifying inventory based on the percentage of total value and the percentage of total quantity. Ans: True Difficulty: Moderate Feedback: Inventory Control Systems 10. Class A items in the ABC classification system require less monitoring and control than Class C items. Ans: False Difficulty: Moderate Feedback: Inventory Control Systems
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11. The economic order quantity (EOQ) model determines the optimal order size that minimizes total annual inventory costs. Ans: True Difficulty: Moderate Feedback: Economic Order Quantity Models 12. A quantity discount is a price discount available if a predetermined number of units is ordered. Ans: True Difficulty: Moderate Feedback: Quantity Discounts 13. The reorder point is the level of inventory that promts a new order to be placed in a continuous inventory system. Ans: True Difficulty: Moderate Feedback: Inventory Control Systems 14. The time between orders is variable and the order quantity is constant in the periodic inventory system. Ans: False Difficulty: Moderate Feedback: Inventory Control Systems 15. Seasonal inventory allows a firm to maintain a smooth production flow throughout the year. Ans: True Difficulty: Easy Feedback: The Role of Inventory in Supply Chain Management
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16. Hedging involves buying larger amounts of inventory in anticipation of future price increases. Ans: True
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This note was uploaded on 01/22/2012 for the course COMM 225 taught by Professor Shafaat during the Spring '11 term at Concordia Canada.

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ch13 - File: ch13, Chapter 13: Inventory Management...

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