OTM Exam 2 Reading Questions And Answers (A+)
A delivery truck from a food wholesaler has just delivered fresh meat and produce to a
local restaurant. This meat and produce would be classified as what type of inventory by
the restaurant?
Raw materials inventory
Work-in-process inventory
Finished goods inventory
Seasonal inventory - ANSWER Raw material inventory
Tablets and laptops would be classified as what type of inventory by an electronics
retailer?
Raw materials inventory
Work-in-process inventory
Finished goods inventory
Seasonal inventory - ANSWER Finished goods inventory
Which of the following reasons for holding inventory allows a firm to reduce the impact
of large fixed costs that the firm incurs every time it places an order to a supplier?
Seasonality
Uncertain demand
Buffers
Batching - ANSWER Batching
, A retailer sells its inventory of soda 50 times per year. On average it has 400 bottles of
soda on its shelves.
What is this retailer's average daily sales rate? (Assume 365 days per year.) - ANSWER
54.8 bottles
Average daily sales = 400 × 50 turns / 365 days = 54.8 bottles
Assume an inventory turn of 7.5 for a retailer annually.
What is its days-of-supply of inventory? Assume that there are 365 equivalent days of
sales in a year.- ANSWER 48.7 days
Days-of-supply of inventory = 365 days / 7.5 turns = 48.7 days
A grocery chain recently reported the following: annual sales $89 billion, inventory $5.8
billion and annual cost of goods sold of $64 billion.
What is the firm's annual inventory turns? - ANSWER 11.0 turns
Turns = $64 billion annual COGS / $5.8 billion inventory = 11.0
The newsvendor model works for perishable products. (T/F) - ANSWER True
The newsvendor model considers two types of costs to balance each other.
Fixed cost of ordering
Cost of ordering too many
Shelving items cost
A delivery truck from a food wholesaler has just delivered fresh meat and produce to a
local restaurant. This meat and produce would be classified as what type of inventory by
the restaurant?
Raw materials inventory
Work-in-process inventory
Finished goods inventory
Seasonal inventory - ANSWER Raw material inventory
Tablets and laptops would be classified as what type of inventory by an electronics
retailer?
Raw materials inventory
Work-in-process inventory
Finished goods inventory
Seasonal inventory - ANSWER Finished goods inventory
Which of the following reasons for holding inventory allows a firm to reduce the impact
of large fixed costs that the firm incurs every time it places an order to a supplier?
Seasonality
Uncertain demand
Buffers
Batching - ANSWER Batching
, A retailer sells its inventory of soda 50 times per year. On average it has 400 bottles of
soda on its shelves.
What is this retailer's average daily sales rate? (Assume 365 days per year.) - ANSWER
54.8 bottles
Average daily sales = 400 × 50 turns / 365 days = 54.8 bottles
Assume an inventory turn of 7.5 for a retailer annually.
What is its days-of-supply of inventory? Assume that there are 365 equivalent days of
sales in a year.- ANSWER 48.7 days
Days-of-supply of inventory = 365 days / 7.5 turns = 48.7 days
A grocery chain recently reported the following: annual sales $89 billion, inventory $5.8
billion and annual cost of goods sold of $64 billion.
What is the firm's annual inventory turns? - ANSWER 11.0 turns
Turns = $64 billion annual COGS / $5.8 billion inventory = 11.0
The newsvendor model works for perishable products. (T/F) - ANSWER True
The newsvendor model considers two types of costs to balance each other.
Fixed cost of ordering
Cost of ordering too many
Shelving items cost
