Managing Operations Across the Supply Chain 4Th Edition By Morgan Swink – Test Bank

Managing Operations Across the Supply Chain 4Th Edition By Morgan Swink – Test Bank

Managing Ops Across the Supply Chain, 4e (Swink)
Chapter 7 Managing Inventories

1) Safety stock exists for which of the following reasons?
A) To allow less expensive purchases by buying more.
B) To allow for transportation time.
C) To provide protection against the uncertainties of supply and demand.
D) None of these selections.

2) Which of the following is NOT a role of inventory?
A) Increasing quality of finished goods
B) Balancing supply and demand
C) Buffering uncertainty in supply or demand
D) Enabling geographical specialization

3) A batch of Raisin Bran that has been made at Kellogg’s but not yet packaged in its final cereal box would be an example of what type of inventory?
A) Raw material
B) Work in process
C) Finished goods
D) Maintenance, repair, and operating supplies (MRO)

4) Ball Corporation sells aluminum cans to Anheuser-Busch to use in making six-packs of Budweiser. Anheuser-Busch has a warehouse located at its plant in St. Louis that contains boxes of empty cans received from Ball. From Anheuser-Busch’s perspective, the cans in this warehouse represent:
A) Raw materials and components inventory.
B) Work in process inventory.
C) Finished goods inventory.
D) MRO inventory.

5) Taxes and insurance costs are an example of which of the following costs?
A) Ordering cost.
B) Governmental costs.
C) Carrying (or holding) costs.
D) None of these selections.

6) John Jones of Jones Corporation determined that the cost related to processing an invoice from a supplier was approximately $100 per invoice. This cost is an example of:
A) Inventory holding (or carrying) cost.
B) Inventory investment.
C) Wasted expense.
D) Order cost.

7) Johnson Company had beginning inventory of $1,000,000 and ending inventory of $1,200,000. Johnson has determined inventory carrying cost to be 25 percent. Johnson’s inventory carrying cost was:
A) $250,000.
B) $275,000.
C) $300,000.
D) $500,000.

8) Suppose demand is 45 units a month, average inventory is 60 units, and unit cost is $20. What is the annual inventory turnover?
A) 10
B) 9
C) 0.75
D) 15

9) If beginning inventory is $1,000,000, ending inventory is $1,400,000, sales are $10,000,000, and anticipated sales are $50,000 per day, what is the days of supply?
A) 28 days
B) 70 days
C) 60 days
D) 32 days

10) Natalie’s Cabinets makes cabinets at an average cost of $2,000. Last year, Natalie sold 5,000 units of the cabinets and had an annual turnover rate of four times. Natalie has estimated her inventory carrying cost to be 25 percent. What was Natalie’s annual inventory carrying cost?
A) $625,000
B) $250,000
C) $312,500
D) $125,000