MQM 227 Chapt 20 Questions and Answers 100% Correct
Which of the following is one of the categories of manufacturing inventory?
Economic order inventory
Work-in-process
Quality units
JIT inventory
Reorder point —Answer: Work in Process
When material is ordered from a vendor, which of the following is NOT a reason for delays in
the order arriving on time?
Normal variation in shipping time
A shortage of material at the vendor's plant causing backlogs
An unexpected strike at the vendor's plant
A lost order
Redundant ordering systems —Answer: Redundant ordering Systems
Which of the following is usually included as an inventory holding cost?
Order placing
Breakage
Typing up an order
Quantity discounts
Annualized cost of materials —Answer: Breakage
Which of the following is a FIXED-Order quantity inventory model?
Economic order quantity model
The ABC model
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, Periodic replenishment model
Cycle counting model
P model —Answer: Economic order quantity Model
Which of the following is a PERPETUAL system for inventory management?
Fixed-time period
Fixed-order quantity
P model
First-in-first-out
The wheel of inventory —Answer: Fixed order quantity
Which of the following is not an assumption of the basic fixed-order-quantity inventory model?
Ordering or setup costs are constant.
Inventory holding cost is based on average inventory.
Returns to scale of holding inventory are diminishing.
Lead time is constant.
Demand for the product is uniform throughout the period. —Answer: Returns to scale of
holding inventory are diminishing
These assumptions are unrealistic, but they represent a starting point and allow us to use a
simple example:
1. Demand for the product is constant and uniform throughout the period.
2. Lead time (time from ordering to receipt) is constant.
3. Price per unit of product is constant.
4. Inventory holding cost is based on average inventory.
5. Ordering or setup costs are constant.
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Which of the following is one of the categories of manufacturing inventory?
Economic order inventory
Work-in-process
Quality units
JIT inventory
Reorder point —Answer: Work in Process
When material is ordered from a vendor, which of the following is NOT a reason for delays in
the order arriving on time?
Normal variation in shipping time
A shortage of material at the vendor's plant causing backlogs
An unexpected strike at the vendor's plant
A lost order
Redundant ordering systems —Answer: Redundant ordering Systems
Which of the following is usually included as an inventory holding cost?
Order placing
Breakage
Typing up an order
Quantity discounts
Annualized cost of materials —Answer: Breakage
Which of the following is a FIXED-Order quantity inventory model?
Economic order quantity model
The ABC model
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, Periodic replenishment model
Cycle counting model
P model —Answer: Economic order quantity Model
Which of the following is a PERPETUAL system for inventory management?
Fixed-time period
Fixed-order quantity
P model
First-in-first-out
The wheel of inventory —Answer: Fixed order quantity
Which of the following is not an assumption of the basic fixed-order-quantity inventory model?
Ordering or setup costs are constant.
Inventory holding cost is based on average inventory.
Returns to scale of holding inventory are diminishing.
Lead time is constant.
Demand for the product is uniform throughout the period. —Answer: Returns to scale of
holding inventory are diminishing
These assumptions are unrealistic, but they represent a starting point and allow us to use a
simple example:
1. Demand for the product is constant and uniform throughout the period.
2. Lead time (time from ordering to receipt) is constant.
3. Price per unit of product is constant.
4. Inventory holding cost is based on average inventory.
5. Ordering or setup costs are constant.
© 2025 All rights reserved
