Inventory Management MCQ Quiz - Multiple Choice Questions & Answers Page 2

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:

1. 84
2. 46
3. 42
4. none of these

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

1. 90%
2. 75%
3. 50%
4. 30%

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

1. true.
2. false.

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

1. EOQ
2. ROP
3. FOI
4. 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.

1. true.
2. false.

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

1. true.
2. false.

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

1. order size
2. order frequency
3. reorder point

18. Re-ordering level is calculated as

1. Maximum consumption rate x Maximum re-order period
2. Minimum consumption rate x Minimum re-order period
3. Maximum consumption rate x Minimum re-order period
4. Minimum consumption rate x Maximum re-order period

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

1. shortage
2. holding
3. excess
4. ordering

20. The cost of insurance and taxes are included in

1. Cost of ordering
2. Set up cost
3. Inventory carrying cost
4. Cost of shortages