What is the main objective of an Inventory Control System?
a) To minimize the cost of production
b) To maintain optimal inventory levels to meet customer demand while minimizing holding costs
c) To increase the number of suppliers
d) To enhance marketing strategies Answer: b) To maintain optimal inventory levels to meet customer demand while minimizing holding costs
Which inventory control system involves continuously monitoring inventory levels and ordering when they fall below a certain threshold?
a) Periodic Review System
b) Continuous Review System
c) Economic Order Quantity (EOQ)
d) Just-In-Time (JIT) Answer: b) Continuous Review System
In the context of inventory control systems, what does “Cycle Counting” refer to?
a) Counting all inventory items once a year
b) Periodically counting a subset of inventory items to ensure accuracy
c) Counting inventory only during peak seasons
d) Counting only finished goods Answer: b) Periodically counting a subset of inventory items to ensure accuracy
Which system uses a predetermined schedule to review inventory levels and place orders at regular intervals?
a) Continuous Review System
b) Just-In-Time (JIT)
c) Periodic Review System
d) ABC Analysis Answer: c) Periodic Review System
What is the primary advantage of the Just-In-Time (JIT) inventory control system?
a) Increased inventory holding costs
b) Reduced lead times and inventory levels
c) Higher stock levels
d) Increased safety stock Answer: b) Reduced lead times and inventory levels
Which inventory control model focuses on determining the optimal order quantity to minimize total inventory costs?
a) Reorder Point Model
b) EOQ (Economic Order Quantity) Model
c) JIT (Just-In-Time) Model
d) MRP (Material Requirements Planning) Model Answer: b) EOQ (Economic Order Quantity) Model
In an inventory control system, what is “Safety Stock”?
a) Inventory that is stored for promotional purposes
b) Extra inventory kept to prevent stockouts due to demand fluctuations or supply delays
c) Inventory that is expired or obsolete
d) Inventory that is kept to increase turnover rates Answer: b) Extra inventory kept to prevent stockouts due to demand fluctuations or supply delays
Which term describes the level of inventory at which a new order should be placed to replenish stock before it runs out?
a) Economic Order Quantity (EOQ)
b) Reorder Point
c) Safety Stock
d) Maximum Inventory Level Answer: b) Reorder Point
What does “ABC Analysis” in inventory control involve?
a) Classifying inventory items into categories based on their importance and value to prioritize management efforts
b) Calculating safety stock levels
c) Determining reorder points
d) Measuring inventory turnover rates Answer: a) Classifying inventory items into categories based on their importance and value to prioritize management efforts
Which of the following inventory control methods focuses on minimizing holding and ordering costs?
a) JIT (Just-In-Time)
b) EOQ (Economic Order Quantity)
c) Safety Stock
d) Periodic Review System Answer: b) EOQ (Economic Order Quantity)
What is the purpose of “Demand Forecasting” in inventory control systems?
a) To determine the ideal reorder point
b) To predict future demand to plan inventory levels accurately
c) To calculate the economic order quantity
d) To evaluate supplier performance Answer: b) To predict future demand to plan inventory levels accurately
Which inventory control system is characterized by ordering inventory only when it is needed and in the exact quantity required?
a) EOQ (Economic Order Quantity)
b) JIT (Just-In-Time)
c) Periodic Review System
d) Continuous Review System Answer: b) JIT (Just-In-Time)
What does the term “Inventory Turnover Ratio” measure?
a) The frequency at which inventory is counted
b) The rate at which inventory is sold and replaced over a period
c) The optimal order quantity
d) The level of safety stock required Answer: b) The rate at which inventory is sold and replaced over a period
Which of the following is NOT a characteristic of the Continuous Review System?
a) Inventory levels are monitored continuously
b) Orders are placed when inventory reaches a reorder point
c) Orders are placed at regular intervals
d) Suitable for items with high demand variability Answer: c) Orders are placed at regular intervals
What is the role of “Cycle Counting” in maintaining inventory accuracy?
a) To count all inventory items at once a year
b) To regularly count a portion of inventory items to ensure records match actual inventory levels
c) To only count finished goods inventory
d) To increase safety stock levels Answer: b) To regularly count a portion of inventory items to ensure records match actual inventory levels
What does “Safety Stock” help to mitigate in an inventory control system?
a) High carrying costs
b) Stockouts due to fluctuations in demand or supply delays
c) Overordering of inventory
d) Excessive production lead times Answer: b) Stockouts due to fluctuations in demand or supply delays
Which inventory control technique helps to prioritize inventory management efforts based on item value and turnover rate?
a) JIT (Just-In-Time)
b) ABC Analysis
c) EOQ (Economic Order Quantity)
d) MRP (Material Requirements Planning) Answer: b) ABC Analysis
What does the term “Lead Time” refer to in inventory control systems?
a) The time required to sell inventory
b) The time between placing an order and receiving the inventory
c) The time needed to calculate safety stock
d) The time required to forecast demand Answer: b) The time between placing an order and receiving the inventory
Which inventory system involves periodic reviews of inventory levels and placing orders at set intervals?
a) Continuous Review System
b) JIT (Just-In-Time)
c) Periodic Review System
d) EOQ (Economic Order Quantity) Answer: c) Periodic Review System
In inventory control, what is the primary function of “Inventory Replenishment”?
a) To sell excess inventory
b) To adjust safety stock levels
c) To order new inventory to replace items that have been used or sold
d) To calculate the economic order quantity Answer: c) To order new inventory to replace items that have been used or sold