Operations And Supply Chain Management The Core 4th Edition By F. Robert Jacobs – Test Bank

1. Inventory is defined as the stock of any item or resource used in an organization.

TRUE

Inventory is the stock of any item or resource used in an organization.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Remember

Difficulty: 1 Easy

Learning Objective: 11-01

Topic: Understanding Inventory Management

2. An inventory system is a set of policies and controls that monitors levels of inventory and determines what levels should be maintained, when stock should be replenished, and how large orders should be.

TRUE

An inventory system is the set of policies and controls that monitor levels of inventory and determine what levels should be maintained, when stock should be replenished, and how large orders should be.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Remember

Difficulty: 1 Easy

Learning Objective: 11-01

Topic: Understanding Inventory Management

3. One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to specify when items should be ordered.

TRUE

The basic purpose of inventory analysis in manufacturing and stockkeeping services is to specify (1) when items should be ordered and (2) how large the order should be.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Remember

Difficulty: 1 Easy

Learning Objective: 11-01

Topic: Understanding Inventory Management

4. One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine the level of quality to specify.

FALSE

The basic purpose of inventory analysis in manufacturing and stockkeeping services is to specify (1) when items should be ordered and (2) how large the order should be.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Remember

Difficulty: 1 Easy

Learning Objective: 11-01

Topic: Understanding Inventory Management

5. One of the basic purposes of inventory analysis in manufacturing and stockkeeping services is to determine how large the orders to vendors should be.

TRUE

The basic purpose of inventory analysis in manufacturing and stockkeeping services is to specify (1) when items should be ordered and (2) how large the order should be.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Remember

Difficulty: 1 Easy

Learning Objective: 11-01

Topic: Understanding Inventory Management

6. In inventory models, high holding costs tend to favor high inventory levels.

FALSE

Holding (or carrying) costs. This broad category includes the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital. Obviously, high holding costs tend to favor low inventory levels and frequent replenishment.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Understand

Difficulty: 1 Easy

Learning Objective: 11-01

Topic: Understanding Inventory Management

7. In inventory models, high holding costs tend to favor low inventory levels and frequent replenishment.

TRUE

Holding (or carrying) costs. This broad category includes the costs for storage facilities, handling, insurance, pilferage, breakage, obsolescence, depreciation, taxes, and the opportunity cost of capital. Obviously, high holding costs tend to favor low inventory levels and frequent replenishment.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Understand

Difficulty: 1 Easy

Learning Objective: 11-01

Topic: Understanding Inventory Management

8. If the cost to change from producing one product to producing another were zero the lot size would be very small.

TRUE

If there were no costs or loss of time in changing from one product to another, many small lots would be produced.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Understand

Difficulty: 1 Easy

Learning Objective: 11-01

Topic: Understanding Inventory Management

9. Shortage costs are precise and easy to measure.

FALSE

When the stock of an item is depleted, an order for that item must either wait until the stock is replenished or be canceled. There is a trade-off between carrying stock to satisfy demand and the costs resulting from stockout. This balance is sometimes difficult to obtain, because it may not be possible to estimate lost profits, the effects of lost customers, or lateness penalties.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Remember

Difficulty: 1 Easy

Learning Objective: 11-01

Topic: Understanding Inventory Management

10. Dependent demand inventory levels are usually managed by calculations using calculus-driven, cost-minimizing models.

FALSE

Independent demand, the need for any one item is a direct result of the need for some other item, usually a higher-level item of which it is part.

AACSB: Reflective Thinking

Accessibility: Keyboard Navigation

Bloom’s: Remember

Difficulty: 1 Easy

Learning Objective: 11-02

Topic: Understanding Inventory Management