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Inventory Management Unit 17: Inventory Management Objectives

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Inventory Management Unit 17: Inventory Management Objectives

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Questions and Answers

What is the meaning of inventory?

A usable but idle resource (correct)
A non-usable but active resource
A tangible object that cannot be used
A physical object that cannot be stored

What is the role of selective inventory management?

To maintain a large inventory for all items
To prioritize and manage inventory for specific items (correct)
To randomly select items for inventory management
To efficiently manage inventory for all items

What is the exchange curve concept used for in aggregate inventory planning?

To determine the total cost of holding inventory
To analyze the demand patterns for different inventory items
To establish the trade-off between ordering and holding costs (correct)
To calculate the reorder point for inventory items

What is the function of safety stocks in inventory management?

To minimize the risk of stockouts due to uncertain demand (C) Signup and view all the answers

What is the inventory turnover ratio a measure of?

Business performance (C) Signup and view all the answers

What is the purpose of performing sensitivity analysis on a type of inventory model?

To determine the impact of uncertainty on inventory decisions (B) Signup and view all the answers

What is expressed as a fraction of the value of the goods stocked per year?

Cost of carrying inventory (B) Signup and view all the answers

Which term refers to the opportunity cost of blocking material in a non-productive form as inventories?

Cost of carrying inventory (B) Signup and view all the answers

What does the cost of incurring shortages represent?

Opportunity cost of not having an item in stock when one is demanded (D) Signup and view all the answers

What is the inventory management concerned with?

Both a and b (C) Signup and view all the answers