Operations Management Processes And Supply Chains 12th Edition – Test Bank

Operations Management Processes And Supply Chains 12th Edition – Test Bank

Operations Management: Processes and Supply Chains, 12e (Krajewski)
Chapter 9 Inventory Management

9.1 Inventory Trade-Offs

1) A quantity discount is attractive because there is a drop in the price per unit when the order is sufficiently large.
Answer: TRUE
Difficulty: Easy
Keywords: quantity discount
Learning Outcome: Compare the advantages and disadvantages of common inventory systems
AACSB: Application of Knowledge
Learning Obj.: Identify the advantages, disadvantages, and costs of holding inventory.

2) Inventory management is the planning and controlling of inventories in order to meet the competitive priorities of the organization.
Answer: TRUE
Difficulty: Easy
Keywords: inventory management, planning, controlling
Learning Outcome: Compare the advantages and disadvantages of common inventory systems
AACSB: Application of Knowledge
Learning Obj.: Identify the advantages, disadvantages, and costs of holding inventory.

3) When looking at inventory management, the term “lot size” refers to the physical dimensions of the area where the inventory is stored.
Answer: FALSE
Difficulty: Easy
Keywords: inventory management, lot size
Learning Outcome: Compare the advantages and disadvantages of common inventory systems
AACSB: Application of Knowledge
Learning Obj.: Identify the advantages, disadvantages, and costs of holding inventory.

4) When looking at inventory management, the term “lot size” refers to the quantity of an inventory item management either buys from a supplier or manufactures using internal processes.
Answer: TRUE
Difficulty: Easy
Keywords: inventory management, lot size, buys, manufactures
Learning Outcome: Compare the advantages and disadvantages of common inventory systems
AACSB: Application of Knowledge
Learning Obj.: Identify the advantages, disadvantages, and costs of holding inventory.

5) The primary reason for keeping inventories low is that inventory represents a temporary monetary investment.
Answer: TRUE
Difficulty: Easy
Keywords: inventory, investment
Learning Outcome: Compare the advantages and disadvantages of common inventory systems
AACSB: Application of Knowledge
Learning Obj.: Identify the advantages, disadvantages, and costs of holding inventory.

6) One component of the holding cost of inventory is interest.
Answer: TRUE
Difficulty: Moderate
Keywords: holding cost, inventory, interest
Learning Outcome: Compare the advantages and disadvantages of common inventory systems
AACSB: Application of Knowledge
Learning Obj.: Identify the advantages, disadvantages, and costs of holding inventory.

7) One component of the ordering cost of inventory is shrinkage.
Answer: FALSE
Difficulty: Moderate
Keywords: ordering cost, shrinkage
Learning Outcome: Compare the advantages and disadvantages of common inventory systems
AACSB: Application of Knowledge
Learning Obj.: Identify the advantages, disadvantages, and costs of holding inventory.