BUSOBA 3130 EXAM 2 UPDATED ACTUAL QUESTIONS
AND CORRECT ANSWERS
Question:
1. What is the reason for keeping inventory?
Answer:
To cover shifts in demand
Question:
2. Independent Demand Inventory
Answer:
items for which demand is influenced by market conditions and is not related to
production decisions
Question:
3. Dependent Demand Inventory
Answer:
items required as components or inputs to a product or service and depends on
independent demand
Question:
4. Inventory
Answer:
the physical items (stock) used by the firm to transform and provide goods and
services to customers
Question:
5. What is the only good reason to have inventory?
Answer:
When it costs less to have it than to not have it
Question:
6. 4 types of inventory costs
Answer:
Item Cost
Ordering/Setup Cost
Carrying/Holding Cost
Stock Out Cost
, Question:
7. Ordering/Setup Cost
Answer:
includes creating and issuing a purchase or build order, paperwork processing,
receiving, set-up, invoice payment, etc.
Question:
8. Carrying/Holding Cost
Answer:
a percent of the per unit dollar value of inventory per unit of time
Question:
9. Stock Out Cost
Answer:
costs of expediting more or lower customer service
Question:
10. Cycle Inventory (aka lot or batch)
Answer:
inventory that results from the replenishment process of a fixed order quantity
(avg. = Q/2)
Question:
11. Safety Stock
Answer:
Extra held due to uncertainties in demand or supply
Question:
12. Anticipation Stock
Answer:
Items stocked in anticipation of a known event
Question:
13. Hedge Stock
Answer:
inventory of items for possible events
Question:
14. pipeline inventory
Answer:
Items that are enroute from one location to another
AND CORRECT ANSWERS
Question:
1. What is the reason for keeping inventory?
Answer:
To cover shifts in demand
Question:
2. Independent Demand Inventory
Answer:
items for which demand is influenced by market conditions and is not related to
production decisions
Question:
3. Dependent Demand Inventory
Answer:
items required as components or inputs to a product or service and depends on
independent demand
Question:
4. Inventory
Answer:
the physical items (stock) used by the firm to transform and provide goods and
services to customers
Question:
5. What is the only good reason to have inventory?
Answer:
When it costs less to have it than to not have it
Question:
6. 4 types of inventory costs
Answer:
Item Cost
Ordering/Setup Cost
Carrying/Holding Cost
Stock Out Cost
, Question:
7. Ordering/Setup Cost
Answer:
includes creating and issuing a purchase or build order, paperwork processing,
receiving, set-up, invoice payment, etc.
Question:
8. Carrying/Holding Cost
Answer:
a percent of the per unit dollar value of inventory per unit of time
Question:
9. Stock Out Cost
Answer:
costs of expediting more or lower customer service
Question:
10. Cycle Inventory (aka lot or batch)
Answer:
inventory that results from the replenishment process of a fixed order quantity
(avg. = Q/2)
Question:
11. Safety Stock
Answer:
Extra held due to uncertainties in demand or supply
Question:
12. Anticipation Stock
Answer:
Items stocked in anticipation of a known event
Question:
13. Hedge Stock
Answer:
inventory of items for possible events
Question:
14. pipeline inventory
Answer:
Items that are enroute from one location to another
