IDIS 343 PRACTICE EXAM 2026 FINAL
QUESTIONS WITH COMPLETE SOLUTIONS
VERIFIED
◉ What are the arguments against inventories? Answer: -wasteful
-mask quality problems
-promote insular attitude in supply chains
◉ In transit (Pipeline) inventory Answer: - In transit between
echelons
- Work-in process inventories
◉ Stocks hold for speculation inventory Answer: inventories built up
in anticipation of seasonal selling
◉ Regular/Cyclical inventory Answer: necessary to meet the average
demand during the time between successive replenishment
◉ safety stock inventory Answer: created as a hedge against the
variability in demand and in lead time
◉ obsolete/dead inventory Answer: Out of date, lost or stolen
,◉ Nature of Demand Answer: -perpetual demand
++common, indefinite future, 3-5 years before declaring
-lumpy/erratic demand
++may perpetual, not as predictable as seasonal
-terminating demand
++textbooks with planned revisions
-derived demand
◉ What are some criteria that could be used in ABC classification?
Answer: -sales ($)
-sales quantity
-criticality to operations
-profitability
-usage rate * volume dollar
-value & criticality
-multiple dimensions (cluster analysis)
◉ ROP Answer: Reorder point
,D * LT
◉ What should you for when inventory is lower than or equal to a
specified quantity (I.e., ROP)? Answer: Economic Order Quantity of
Q* is placed
◉ Service Level Answer: 1- (expected # of units out of stock
annually) / (total annual demand)
◉ Procurement cost Answer: -cost of preparing the order
-cost of order transmission
-cost of production setup if appropriate
-cost of materials handling or processing at the receiving dock
price of the goods
◉ carrying cost Answer: -space costs (rent, operating)
-capital costs (intangible, subjective)
-inventory service costs (insurance, taxes)
-inventory risk costs (deterioration, damage)
◉ cost items related to inventory Answer: -procurement cost
-carrying cost
, -out-of-stock costs
◉ Pull inventory management philosophy Answer: -Draws inventory
into the stocking location
-Each stocking location is considered independent
-Maximizes local control of inventories
◉ push inventory management philosophy Answer: -allocated
production to stocking locations based on overall demand forecast
-inventories can be managed centrally for better overall control
-encourages economies of scale in production
◉ just-in-time inventory management philosophy Answer: -
attempts to synchronize stock flows so as to just meet demand as it
occurs
-minimizes the need for inventory
◉ supply-driven inventory management philosophy Answer: -supply
quantities and timing are unknown
-all supply must be accepted and processed
-inventories are controlled through demand
-American Red Cross
QUESTIONS WITH COMPLETE SOLUTIONS
VERIFIED
◉ What are the arguments against inventories? Answer: -wasteful
-mask quality problems
-promote insular attitude in supply chains
◉ In transit (Pipeline) inventory Answer: - In transit between
echelons
- Work-in process inventories
◉ Stocks hold for speculation inventory Answer: inventories built up
in anticipation of seasonal selling
◉ Regular/Cyclical inventory Answer: necessary to meet the average
demand during the time between successive replenishment
◉ safety stock inventory Answer: created as a hedge against the
variability in demand and in lead time
◉ obsolete/dead inventory Answer: Out of date, lost or stolen
,◉ Nature of Demand Answer: -perpetual demand
++common, indefinite future, 3-5 years before declaring
-lumpy/erratic demand
++may perpetual, not as predictable as seasonal
-terminating demand
++textbooks with planned revisions
-derived demand
◉ What are some criteria that could be used in ABC classification?
Answer: -sales ($)
-sales quantity
-criticality to operations
-profitability
-usage rate * volume dollar
-value & criticality
-multiple dimensions (cluster analysis)
◉ ROP Answer: Reorder point
,D * LT
◉ What should you for when inventory is lower than or equal to a
specified quantity (I.e., ROP)? Answer: Economic Order Quantity of
Q* is placed
◉ Service Level Answer: 1- (expected # of units out of stock
annually) / (total annual demand)
◉ Procurement cost Answer: -cost of preparing the order
-cost of order transmission
-cost of production setup if appropriate
-cost of materials handling or processing at the receiving dock
price of the goods
◉ carrying cost Answer: -space costs (rent, operating)
-capital costs (intangible, subjective)
-inventory service costs (insurance, taxes)
-inventory risk costs (deterioration, damage)
◉ cost items related to inventory Answer: -procurement cost
-carrying cost
, -out-of-stock costs
◉ Pull inventory management philosophy Answer: -Draws inventory
into the stocking location
-Each stocking location is considered independent
-Maximizes local control of inventories
◉ push inventory management philosophy Answer: -allocated
production to stocking locations based on overall demand forecast
-inventories can be managed centrally for better overall control
-encourages economies of scale in production
◉ just-in-time inventory management philosophy Answer: -
attempts to synchronize stock flows so as to just meet demand as it
occurs
-minimizes the need for inventory
◉ supply-driven inventory management philosophy Answer: -supply
quantities and timing are unknown
-all supply must be accepted and processed
-inventories are controlled through demand
-American Red Cross
