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    Elaine Yap
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    This document contains 11 true/false questions about inventory management concepts. It tests understanding of different types of inventory like safety stock, work in process inventory, and how factors like order size can impact total holding and ordering costs. Key concepts covered include defining safety stock and work in process inventory, and how larger orders can lower total ordering costs but increase total holding costs.

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    This document contains 11 true/false questions about inventory management concepts. It tests understanding of different types of inventory like safety stock, work in process inventory, and how factors like order size can impact total holding and ordering costs. Key concepts covered include defining safety stock and work in process inventory, and how larger orders can lower total ordering costs but increase total holding costs.

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    © All Rights Reserved
    Scarica in formato DOCX, PDF, TXT o leggi online su Scribd
    Segnala contenuti inappropriati
    30 visualizzazioni2 pagine

    Document

    Caricato da

    Elaine Yap
    This document contains 11 true/false questions about inventory management concepts. It tests understanding of different types of inventory like safety stock, work in process inventory, and how factors like order size can impact total holding and ordering costs. Key concepts covered include defining safety stock and work in process inventory, and how larger orders can lower total ordering costs but increase total holding costs.

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    © All Rights Reserved
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    di 2

    RUE/FALSE

    1. An airline seat is an example of an asset held for future use or sale.

    ANS: T PTS: 1

    2. Safety stock inventory is an additional amount of inventory kept over and above the average
    amount required to meet demand during the lead time.

    ANS: T PTS: 1

    3. Airline seats and call center phone lines are examples of inventory in service organizations.

    ANS: T PTS: 1

    4. Maintaining large stocks of inventory is a requirement in today's supply chains in order to


    improve profitability.

    ANS: F PTS: 1

    5. Marketing an operations generally prefer high inventory levels while finance would prefer
    small inventories.

    ANS: T PTS: 1

    6. Work in process inventory is completed products ready for distribution or sale to customers.

    ANS: F PTS: 1

    7. Safety stock inventory is an additional amount of inventory kept over and above the average
    amount required to meet demand.

    ANS: T PTS: 1

    8. Setup costs depend on the number of items manufactured.

    ANS: F PTS: 1

    9. Inventory holding costs can be accurately measured by accounting departments.

    ANS: F PTS: 1

    10. Costs associated with maintaining storage facilities such as gas and electricity, taxes, and
    insurance are associated with fixed ordering costs.
    ANS: F PTS: 1

    11. Larger orders result in higher total holding cost but lower total ordering cost.

    ANS: T PTS: 1

    days
    B. 60 days
    C. 10 days
    D. 57 days

    15. Which of the following trade credit terms is not valid?


    A. 3/10, net 50
    B. 8/10 EOM, net 60
    C. 2/10, net 30
    D. All of the above are valid credit terms

    16. Supposing you purchase goods on terms of 1/10, net 30. Taking compounding into
    account, what annual rate of interest is implied by the cash discount? (Assume a year
    has 365
    days.)
    A. 9.6%
    B. 9.2%
    C. 20.1%
    D. 44.6%

    17. Suppose you purchase goods on terms of 3/10, net 60. Taking compounding into
    account,
    what annual rate of interest is implied by the cash discount? (Assume a year has 365
    days.)
    A. 32%
    B. 5%
    C. 91%
    D. 28.2%

    18. Suppose you purchase goods on terms of 2/10, net 50. Taking compounding into
    account,
    what annual rate of interest is implied by the cash discount? (Assume a year has 365
    days.)

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