- 1. Inventory theory is a fundamental concept in supply chain management that deals with the optimization of inventory levels within an organization. The main objective of inventory theory is to strike a balance between meeting customer demand and minimizing the costs associated with holding excess inventory. By carefully managing inventory levels, businesses can ensure timely fulfillment of customer orders while simultaneously reducing carrying costs and avoiding stockouts. Inventory theory involves various models and techniques, such as economic order quantity (EOQ), just-in-time (JIT) inventory systems, and safety stock analysis, to effectively manage the flow of goods and materials through the supply chain. Through the application of inventory theory, organizations can improve operational efficiency, enhance customer satisfaction, and ultimately achieve a competitive advantage in the marketplace.
What is the goal of inventory theory?
A) Maximize the total cost of inventory
B) Minimize the total cost of inventory
C) Ignore inventory management
D) Maintain unlimited inventory levels
- 2. What does EOQ stand for in inventory theory?
A) Economic Order Quantity
B) Extremely Overstocked Quantity
C) Optimal Order Query
D) Effective Order Quantity
- 3. What is the main purpose of safety stock in inventory management?
A) To increase overall inventory costs
B) To protect against demand variability
C) To expedite order processing
D) To ignore inventory levels
- 4. Lead time in inventory refers to:
A) The time to place an order
B) The time between placing an order and receiving it
C) The time goods are held in inventory
D) The time to review inventory levels
- 5. What is the formula for calculating reorder point in inventory management?
A) Lead time demand + Safety stock
B) Ordering cost + Stockout cost
C) Economic order quantity + Demand rate
D) Holding cost + Shortage cost
- 6. What is the purpose of demand forecasting in inventory management?
A) To increase ordering costs
B) To expedite stockouts
C) To estimate future demand and plan inventory levels
D) To ignore inventory needs
- 7. Which inventory classification typically includes high-value items with low demand?
A) B items
B) A items
C) X items
D) C items
- 8. What is the main disadvantage of holding excess inventory?
A) Reduced shortages
B) Faster order processing
C) Increased holding costs
D) Higher service levels
- 9. Which cost decreases as order quantity increases in the EOQ model?
A) Stockout cost
B) Ordering cost
C) Shortage cost
D) Holding cost
- 10. What is the purpose of the Economic Order Quantity (EOQ) model?
A) To maintain unlimited inventory levels
B) To maximize total inventory costs
C) To ignore inventory levels
D) To minimize total inventory costs
- 11. How does increasing lead time affect the reorder point?
A) Doubles the reorder point
B) Decreases the reorder point
C) Has no effect on the reorder point
D) Increases the reorder point
|