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Inventory Management Terminology and Cost Calculations Quiz

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Inventory Management Terminology and Cost Calculations Quiz

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Questions and Answers

What is the objective of inventory control?

To minimize carrying cost of inventory (correct)

To maximize the return on Investment (ROI)

To maximize the shortage costs

To maximize the production efficiency and distribution effectiveness

What is the concept of EOQ (Economic Order Quantity) about?

Minimizing the carrying cost

Balancing the supply and demand

Bringing a trade off between the order cost and holding and shortage cost (correct)

Maximizing the order cost

Which terminology is used in Inventory management to denote the level at which new stock should be ordered?

Order Cycle

Re-order quantity

Stock Replenishment Time

Re-order level (correct)

What is the function of safety stock in Inventory management?

To buffer against uncertainties in demand and supply Signup and view all the answers

What is the unit order cost behavior in the EOQ model?

It decreases on increase of quantity but never becomes zero Signup and view all the answers

What is the primary purpose of the concept of EOQ (Economic Order Quantity)?

To balance order cost and holding/shortage cost Signup and view all the answers

What is the term used in Inventory management to denote the time between placing an order and receiving the delivery?

Lead Time Signup and view all the answers

Which function of inventory management focuses on maintaining a buffer stock to mitigate the risk of stockouts?

Safety stock Signup and view all the answers

What is the primary objective of inventory control?

To reduce the shortage costs Signup and view all the answers

What terminology is used to represent the level at which new stock should be ordered in Inventory management?

Re-order Level Signup and view all the answers