Multiple Choice Questions

This activity contains 10 questions.

Inventory carried for the purpose of providing flexibility to each decisionmaking unit to manage its operations independently is known as
Cycle inventory
Safety inventory
Decoupling
inventory
Pipeline inventory
Seasonal inventory

Cycle inventory helps in

finding out the amount of stock required during a finite period in order
to move the materials from one location to another
providing flexibility to each decision-making unit to manage its
operations independently
taking care of any special event that does not occur on a regular basis
taking care of uncertainty in demand and supply of
products/components
taking advantage of economies of scale and reducing cost within the
supply chain

The inventory which is dependent on alternative modes of transportation

is known as
Safety inventory
Seasonal inventory
Decoupling
inventory
Pipeline inventory

Cycle inventory

In an automobile manufacturing facility, the management has brought

down the cost of ordering of automotive components from Rs 500 to Rs 50
through the introduction of electronic ordering. The annual demand of
cars is 15,000 units. Inventory carrying cost of automotive components is
Rs 20 per unit per year. The inventory turnover ratio in both the cases
would be
33.64 and
107.48
35.64 and
111.48
34.64 and
109.48
32.64 and
112.48
36.64 and
112.48

Inventory turnover ratio = Annual demand/Average stock Average stock in the current
problem = Cycle stock; Cycle stock = Q/2

8.66 and
1.74
9.66 and
3.74
8.66 and
2.74
7.66 and
1.74
8.66 and
3.74

Number of days for which inventory is carried = Average stock in hand/Average daily
demand, i.e., Cycle stock / Average daily demand

The best strategy of minimizing the amount of safety inventory to be kept

in a store without hurting the level of customer service is
minimizing the uncertainty inherent in
supply
minimizing the cycle service level
minimizing the uncertainty inherent in
demand
reducing the supply lead time

Higher demand uncertainty provides higher savings by pooling which of

the following inventory?
Pipeline inventory
Seasonal inventory
Decoupling
inventory
Safety inventory
Cycle inventory

Higher number of stock points required for risk pooling results in higher
savings in terms of
safety inventory
seasonal inventory
cycle inventory
decoupling
inventory
pipeline inventory

Centralized system will provide benefits for the items which

have high demand variability
are slow moving and have high demand
variability
are slow-moving
have low demand variability
are fast-moving

Decentralized system will provide benefits for the items which

have high demand variability
have low demand variability
are slow-moving
are fast-moving
are fast moving and have low demand
variability