11. If average demand for an item is 21 units per day, safety stock is 4 units, and lead time is 2 days, the ROP will be:

- 84
- 46
- 42
- none of these

12. In an A-B-C system, B items typically represent about this percentage of items:

- 90%
- 75%
- 50%
- 30%

13. In the basic EOQ model, annual ordering cost and annual ordering cost are equal for the optimal order quantity.

- true.
- false.

14. In the two-bin system, the quantity in the second bin is equal to the:

- EOQ
- ROP
- FOI
- None of these

15. Increasing the order quantity so that it is slightly above the EOQ would not increase the total cost by very much.

- true.
- false.

16. Inventory might be held to take advantage of order cycles.

- true.
- false.

17. Other things beings equal, an increase in lead time for inventory orders will result in an increase in the:

- order size
- order frequency
- reorder point

18. Re-ordering level is calculated as

- Maximum consumption rate x Maximum re-order period
- Minimum consumption rate x Minimum re-order period
- Maximum consumption rate x Minimum re-order period
- Minimum consumption rate x Maximum re-order period

19. Setup costs are analogous to which one of these costs?

- shortage
- holding
- excess
- ordering

20. The cost of insurance and taxes are included in

- Cost of ordering
- Set up cost
- Inventory carrying cost
- Cost of shortages

MCQ Multiple Choice Questions and Answers on Inventory Management

Inventory Management Question and Answer