Inventory Management Multiple Choice Questions and Answers

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

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

22. 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

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

1. true.
2. false.

25. 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

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 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

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 objective of inventory management is to minimize holding costs.

1. true.
2. false.

30. The order cost per order of an inventory is Rs. 400 with an annual carrying cost of Rs. 10 per unit. The Economic Order Quantity (EOQ) for an annual demand of 2000 units is

1. 400
2. 440
3. 480
4. 500