BUSOBA 3130 FINAL UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS
Question:
1. independent demand inventory
Answer:
items for which demand is influenced by market conditions and is not related to
production decisions for any other item held in stock
Question:
2. dependent demand inventory
Answer:
items required as components or inputs to a product or service and depends on
(can be calculated from) independent demand
Question:
3. inventory
Answer:
physical items (stock) used by the firm to transform and provide goods and
services to customers (what, when, and how much)
Question:
4. unit/item cost
Answer:
cost of each individual unit of inventory
Question:
5. ordering cost
Answer:
cost of preparing a purchase order for a supplier or a production order for the
shop
Question:
6. set up cost
Answer:
cost involved in changing over a machine to produce a different item
, Question:
7. stock out/shortage costs
Answer:
costs of expediting more or lower customer service
Question:
8. inventory holding/carrying cost
Answer:
cost of holding an item in inventory - sum of the cost of capital and the variable
costs of keeping items on hand, such as shortage and handling, taxes, insurance,
and shrinkage
Question:
9. transportation costs
Answer:
full truck (FTL) or container loads
Question:
10. quantity discount
Answer:
lower price per unit for a sufficiently large order
Question:
11. raw materials
Answer:
material from which a product is made
Question:
12. components
Answer:
parts of a product
Question:
13. MRO
Answer:
Maintenance, Repair and operating supplies - intended to retain or restore a
functional unit to its operational state
AND CORRECT ANSWERS
Question:
1. independent demand inventory
Answer:
items for which demand is influenced by market conditions and is not related to
production decisions for any other item held in stock
Question:
2. dependent demand inventory
Answer:
items required as components or inputs to a product or service and depends on
(can be calculated from) independent demand
Question:
3. inventory
Answer:
physical items (stock) used by the firm to transform and provide goods and
services to customers (what, when, and how much)
Question:
4. unit/item cost
Answer:
cost of each individual unit of inventory
Question:
5. ordering cost
Answer:
cost of preparing a purchase order for a supplier or a production order for the
shop
Question:
6. set up cost
Answer:
cost involved in changing over a machine to produce a different item
, Question:
7. stock out/shortage costs
Answer:
costs of expediting more or lower customer service
Question:
8. inventory holding/carrying cost
Answer:
cost of holding an item in inventory - sum of the cost of capital and the variable
costs of keeping items on hand, such as shortage and handling, taxes, insurance,
and shrinkage
Question:
9. transportation costs
Answer:
full truck (FTL) or container loads
Question:
10. quantity discount
Answer:
lower price per unit for a sufficiently large order
Question:
11. raw materials
Answer:
material from which a product is made
Question:
12. components
Answer:
parts of a product
Question:
13. MRO
Answer:
Maintenance, Repair and operating supplies - intended to retain or restore a
functional unit to its operational state
