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Multiple Choice Quiz
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1
Inventory used for decoupling is used to:
A)Make businesses wait longer for products
B)Make one part of a business less directly dependent on other parts of the business
C)Reduce overall inventory levels
D)Provide JIT deliveries
2
If average demand was 20 units per day, and 200 units were in inventory, there would be:
A)20 days of supply
B)200 days of supply
C)10 days of supply
D)4000 days of supply
3
An example of dependent demand inventory would be:
A)Milk in a grocery store
B)Finished products in a toy factory's warehouse
C)Silos full of grain at a brewery
D)Lubricants used to maintain a manufacturer's machinery
4
A key difference between independent and dependent demand inventory is:
A)Independent demand is probabilistic, while dependent demand can be calculated precisely.
B)Dependent demand is probabilistic, while independent demand can be calculated precisely.
C)Dependent demand is always lower than independent demand.
D)Dependent demand is more likely to result in forecast error.
5
An example of a fixed quantity, variable interval model would be:
A)Material requirements planning
B)A typical reorder point system
C)A periodic review system
D)The economic order quantity model
6
One weakness thought to be true of the EOQ model is that:
A)The "2" in the numerator inflates the result.
B)There is no such thing as an order cost.
C)It is too flat at the bottom of the total cost curve.
D)The total cost equation doesn't include nonfinancial costs associated with carrying inventory.
7
In a reorder point system, the safety stock:
A)Inflates the inventory level by the amount of the safety stock
B)Has no impact on the inventory level
C)Can't be used to satisfy demand
D)Satisfies demand whenever it is above average
8
In material requirements planning logic, the lead time:
A)Is used to calculate net requirements
B)Is used to calculate gross requirements of the end product
C)Is used in backward scheduling to determine when the planned order release should take place
D)Is used to add a safety stock to the net requirements
9
ABC analysis is used:
A)To allocate overhead costs to activities
B)To alphabetize part numbers
C)To prioritize inventory by importance
D)To identify which inventory items are dependent and which are independent
10
Dollar days are:
A)The number of days times the number of dollars of sales
B)The number of days inventory is held
C)The number of dollars of inventory sold daily
D)The number of days until inventory will be sold multiplied by its dollar value





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