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Multiple Choice Quiz
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1
Decoupling inventories refers to the buffering effect that inventories have at each stage of the supply chain.
A)True
B)False
2
The holding (or not holding) of inventory can be used in a speculative nature, whereby companies can profit from changes in the prices of supplies.
A)True
B)False
3
A supplier's offering of volume discounts does not affect the customer's EOQ.
A)True
B)False
4
A service level of .05 implies that a company holds enough safety stock that it will stockout only 5% of the time.
A)True
B)False
5
Point-of-Sale (POS) data is crucial for a successful periodic review inventory control system.
A)True
B)False
6
The familiar "bar code" is being replaced by RFID.
A)True
B)False
7
How has information technology helped inventory management?
A)Bar codes have simplified continuous review systems.
B)Electronic data interchange has lowered ordering costs.
C)More accurate sales data has enabled companies to improve forecasting techniques.
D)All of the above
8
_______________ is not an inventory holding cost?
A)Taxes or insurance
B)Opportunity cost of capital
C)Negotiating prices
D)Theft or pilferage
9
Which of the following is not a consideration for designing, implementing and managing an inventory system?
A)How quickly can decisions concerning inventory levels be made?
B)What is the demand like and how it has been changing?
C)How long will demand for this item last?
D)What is the average lead time and how variable is it?
10
What should be the EOQ; if demand for bicycles is 500 per year, holding cost is $5 per month, and it costs $24 each time you place an order?
A)14
B)20
C)49
D)69
11
Assume that you sell gold-plated necklaces at the mall. Your daily demand is uniform between 0 and 9. If your desired service level is 90%, how many necklaces should you have in your safety stock?
A)3
B)4
C)5
D)8
12
Which of the following statements about inventory control systems is not true?
A)For any inventory control system two questions, when to place an order and how much to order, must be answered.
B)The safety stock for the continuous review system is larger than that for the periodic review system.
C)The EOQ for the continuous review system and review period for the periodic review system are directly related.
D)The order quantity varies for the periodic review system and time between orders varies for the continuous review system.





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