Inventory Management MCQ Questions and Answers for Practice

1. Which of the following is true for Inventory control?

1. Economic order quantity has minimum total cost per order
2. Inventory carrying costs increases with quantity per order
3. Ordering cost decreases with lo size
4. All of the above

2. Which of the following is true for Inventory control?

1. Economic order quantity has minimum total cost per order
2. Inventory carrying costs increases with quantity per order
3. Ordering cost decreases with lo size
4. All of the above

3. Which product is usually bought on a fixed interval basis?

1. textbooks
2. wedding gifts
3. sugar
4. brownies

4. Which product is usually bought on an ROP basis?

1. textbooks
2. wedding gifts
3. sugar
4. newspaper

5. A fixed-interval ordering system would be used for items that have independent demand.

1. true.
2. false.

6. A store that sells daily newspapers could use the single-period model for reordering.

1. true.
2. false.

7. A two-bin system is essentially a simple reorder point system.

1. true.
2. false.

8. Average stock level can be calculated as

1. Minimum stock level + ½ of Re-order level
2. Maximum stock level + ½ of Re-order level
3. Minimum stock level + 1/3 of Re-order level
4. Maximum stock level + 1/3 of Re-order level

9. Holding and ordering costs are inversely related to each other.

1. true.
2. false.

10. If a decrease in unit price causes the average demand rate to increase, which one of these would not increase?

1. the EOQ
2. lead time
3. annual holding cost
4. the ROP

11. If average demand for an item is 21 units per day, safety stock is 4 units, and lead time is 2 days, the ROP will be:

1. 84
2. 46
3. 42
4. none of these

12. In an A-B-C system, B items typically represent about this percentage of items:

1. 90%
2. 75%
3. 50%
4. 30%

13. In the basic EOQ model, annual ordering cost and annual ordering cost are equal for the optimal order quantity.

1. true.
2. false.

14. In the two-bin system, the quantity in the second bin is equal to the:

1. EOQ
2. ROP
3. FOI
4. None of these

15. Increasing the order quantity so that it is slightly above the EOQ would not increase the total cost by very much.

1. true.
2. false.