OSC EXAM 2 QUESTIONS AND
ANSWERS. VERIFIED 2026.
Your on-hand inventory plus outstanding orders minus any backorder quantities is
your___________. - ANS inventory position
Which of the following is generally Not a reason to reduce inventory?
To minimize property taxes and insurance premiums
To minimize the cost of storage and handling
To minimize shrinkage and spoilage
To increase customer service levels
To minimize interest paid on operating capital - ANS To increase customer service levels
Which of the following is not a component of total inventory cost?
Inventory position
Ordering cost
Overhead cost
Order quantity
Annual demand - ANS Overhead cost
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, An inventory review system that always orders the same quantity of items but may have
differing periods of time between orders has what type of review system? - ANS Continuous
The time during which safety stock must protect against running out of stock is known as the
________. - ANS Protection interval
The total annual inventory cost will be minimized when the holding cost is equal to what? -
ANS The ordering cost
What kind of demand can be derived from a "parent" item or can be a component part? -
ANS Dependent
The primary objective of an inventory system is to determine - ANS When items should be
ordered and what quantity should be ordered.
Why would a company offer discounted pricing for items that they sell? - ANS To take
advantage of economies of scale
Cycle counting is used to ensure _________. - ANS Inventory accuracy
If the excess cost is higher than the shortage cost, then you should... - ANS Order fewer than
the average expected demand.
The newsvendor problem helps to model inventory for what type of products? -
ANS Perishable items
Which of the following describes a periodic review system? - ANS Because airlines weigh the
cost of overbooking versus the cost of empty seats.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
ANSWERS. VERIFIED 2026.
Your on-hand inventory plus outstanding orders minus any backorder quantities is
your___________. - ANS inventory position
Which of the following is generally Not a reason to reduce inventory?
To minimize property taxes and insurance premiums
To minimize the cost of storage and handling
To minimize shrinkage and spoilage
To increase customer service levels
To minimize interest paid on operating capital - ANS To increase customer service levels
Which of the following is not a component of total inventory cost?
Inventory position
Ordering cost
Overhead cost
Order quantity
Annual demand - ANS Overhead cost
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, An inventory review system that always orders the same quantity of items but may have
differing periods of time between orders has what type of review system? - ANS Continuous
The time during which safety stock must protect against running out of stock is known as the
________. - ANS Protection interval
The total annual inventory cost will be minimized when the holding cost is equal to what? -
ANS The ordering cost
What kind of demand can be derived from a "parent" item or can be a component part? -
ANS Dependent
The primary objective of an inventory system is to determine - ANS When items should be
ordered and what quantity should be ordered.
Why would a company offer discounted pricing for items that they sell? - ANS To take
advantage of economies of scale
Cycle counting is used to ensure _________. - ANS Inventory accuracy
If the excess cost is higher than the shortage cost, then you should... - ANS Order fewer than
the average expected demand.
The newsvendor problem helps to model inventory for what type of products? -
ANS Perishable items
Which of the following describes a periodic review system? - ANS Because airlines weigh the
cost of overbooking versus the cost of empty seats.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
