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Inventory/Purchasing Questions

Inventory/Purchasing Questions. “Top Secret”. 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

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Inventory/Purchasing Questions

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Dead stock is… • Ready to be shipped • Being held for extended periods of time • The same as safety stock • Stock that is obsolete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Dead stock is… • Ready to be shipped • Being held for extended periods of time • The same as safety stock • Stock that is obsolete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

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