Inventory Management Multiple Choice Questions and Answers

21. 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

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

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

23. 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

24. 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

25. The economic order quantity cannot be used when holding costs are a percentage of purchase cost.

1. true.
2. false.

26. The following classes of costs are usually involved in inventory decisions except

1. Cost of ordering
2. Carrying cost
3. Cost of shortages
4. Machining cost

27. The following classes of costs are usually involved in inventory decisions except

1. Cost of ordering
2. Carrying cost
3. Cost of shortages
4. Machining cost

28. The minimum stock level is calculated as

1. Reorder level - (Nornal consumption x Normal delivery time)
2. Reorder level + (Nornal consumption x Normal delivery time)
3. (Reorder level + Nornal consumption) x Normal delivery time
4. (Reorder level + Nornal consumption) / Normal delivery time

29. The minimum stock level is calculated as

1. Reorder level – (Nornal consumption x Normal delivery time)
2. Reorder level + (Nornal consumption x Normal delivery time)
3. (Reorder level + Nornal consumption) x Normal delivery time
4. (Reorder level + Nornal consumption) / Normal delivery time

30. The objective of inventory management is to minimize holding costs.

1. true.
2. false.