Chapter 15 – Managing Supply Chain Inventory

1. Stocks are any materials that an organisation has acquired, but is not ready to use. Is this:
1. true?
2. sometimes true?
3. false?
Which of the following is not normally a type of stock?
1. finished goods
2. maintenance, repairs and operating supplies
3. investment stock
4. work-in-progress
5. pipeline
6. raw materials
Which of the following is not a standard cost associated with inventories?
1. reorder cost
2. holding cost
3. unit cost
4. usage cost
5. shortage
What is the most common objective of inventory management?
1. to maximise customer service
2. to minimise associated costs
3. to minimise stock levels
4. to maximise inventory turns
5. to eliminate shortages
What is the economic order quantity?
1. the total annual purchases of an item in a national economy
2. the total annual purchases of an item by an organisation
3. the smallest order size that qualifies for a price discount
4. the total value of materials bought from a supplier
5. the best order size for a simple inventory system
Which of the following is not a valid reason for holding stock?
1. to allow for unreliable suppliers
2. to support customer service
3. to support operations
4. to hedge against marketplace uncertainty
5. to take advantage of order quantity discounts
Which of the following is a valid reason for holding stock?
1. to allow for long lead times
2. to allow for poor quality
3. to allow for material yield
4. to allow for inaccurate forecasts
5. to allow for inefficient operations
6. to allow for uncertain demand
Lean operations see stocks as a waste of resources. Is this:
1. true?
2. largely true?
3. false?
The three keys to lean operations are:
1. objectivity, efficiency and effectiveness
2. quality, cost and timing
3. flow, pull and excellence
4. operations, logistics and marketing
5. strategy, tactics and operations
Which of the following do lean operations not describe as a common source of waste?
1. waiting
2. unnecessary or excess movements
3. overproduction
4. trade unions
5. defects
6. inappropriate process
Just-in-time operations can eliminate stocks from processes in every organisation. Is this:
1. true?
2. partly true?
3. false?
Which of the following is not commonly used in just-in-time production?
1. order size set by the economic order quantity
2. new process layouts to reduce movements
3. uniform throughput with stable operations
4. product and process simplification
5. flexible and multi-skilled workforce
6. short lead times and equipment set-up times
Which of the following is not a common feature of just-in-time purchasing?
1. commitment to zero defects by the buyer and seller
2. stable products and production schedules
3. extensive sharing of information between trading partners
4. frequent shipment of small quantities
5. short lead times
6. cost minimisation programmes
Which of the following is not generally a barrier to just-in-time purchasing?
1. large number of suppliers
2. high product demand
3. dispersed supply base
4. poor buyer-seller relations
5. poor material quality
Which of the following is not a feature of just-in-time transport?
1. efficient handling of materials
2. pick-up and delivery close to operations
3. reduction in the number of transport operators
4. economies of scale by using large delivery vehicles
5. electronic tagging
6. a closed loop system
What is a kanban?
1. the lead time with ‘pull’ operations
2. quality at source
3. a signal to control JIT operations
4. a small delivery vehicle
5. continuous improvement
Inventory management performance is often judged by:
1. volume, velocity and value
2. speed, schedule and security
3. product, price and promotion
4. effort, efficiency and effectiveness
Which of the following is not a common concern for inventory management?
1. perfect record integrity
2. customer status reports
3. improved product forecasting
4. use of suppliers for on-site inventory management
5. standardised and simplified product design
6. consolidation of companywide purchase volumes
With record integrity does:
1. POH = ROH
2. POH ≠ ROH
3. POH ≥ROH
4. POH ≤ROH
5. any of the above
It is always best to simplify operations and standardise products. Is this:
1. true?
2. usually true?
3. false?
Material Requirements Planning plans the flow of materials by:
1. using just-in-time systems
2. forecasting requirements from customer order
3. using the economic order quantity
4. calculating requirements from a master production schedule
5. none of the above