MGSC 346 LATEST 2026 EVALUATION EXAM
QUESTIONS AND SOLUTIONS GUARANTEE A+
✔Which of the following costs is NOT considered an inventory holding (or carrying)
cost?
A. inventory storage costs
B. inventory transportation costs
C. inventory shrinkage costs
D. inventory handling costs - ✔✔B. inventory transportation costs
✔✔Which of these statements is NOT required in order for the EOQ model to be a
reasonable approach?
A. The demand rate is known and constant.
B. No constraints are placed on the size of each lot.
C. The setup/ordering cost must exceed the annual holding cost of one unit.
D. The lead time is known and constant. - ✔✔C. The setup/ordering cost must exceed
the annual holding cost of one unit.
✔✔For class C SKUs, why is much looser inventory control appropriate?
A. The inventory holding cost of class C SKUs tends to be low.
B. Class C SKUs tend to have very low demand.
C. A stockout of a class C SKU is not as crucial as for a class A SKU.
D. All of the above. - ✔✔A. The inventory holding cost of class C SKUs tends to be low.
✔✔A perpetual inventory system requires that
A. inventory is always on order.
B. inventory records are always current.
C. inventory is constantly being produced.
D. inventory is always in stock. - ✔✔B. inventory records are always current.
✔✔What is the primary lever to reduce cycle inventory?
A. reduce the lot sizes
B. improve demand forecasts
C. use flexible automation
D. place orders closer to the time when they must be received - ✔✔A. reduce the lot
sizes
✔✔A visual version of the Q system
A. is the P system.
, B. is the ABC system.
C. is the R system.
D. is the two-bin system. - ✔✔D. is the two-bin system
✔✔A form of shrinkage called ________ occurs when inventory cannot be used or sold
at full value, owing to model changes, engineering modifications, or unexpectedly low
demand.
A. obsolescence
B. deterioration
C. life-cycle shrink
D. pilferage - ✔✔A. obsolescence
✔✔A reorder point will fall if
A. the setup cost rises.
B. the lead time falls.
C. the variance of demand rises.
D. the chance of a stockout falls. - ✔✔B. the lead time falls.
✔✔The Mickey and Mouse Cat Food Factory runs an aggressive marketing campaign
and much to the delight, orders surge to twice their previous level. If their operations
manager uses an EOQ policy, what is the impact on the order quantity?
A. The order quantity will double.
B. The order quantity will be 50% lower.
C. The order quantity will be 70% higher.
D. The order quantity will be 40% higher. - ✔✔D. The order quantity will be 40% higher.
✔✔Matching the demand rate with the production rate is a primary lever to reduce
A. cycle inventory.
B. pipeline inventory.
C. work-in-process inventory.
D. anticipation inventory. - ✔✔D. anticipation inventory.
✔✔Which of the following is NOT considered a pressure to hold large inventories?
A. the need to increase machine utilization
B. the potential to reduce stockouts
C. the cost of placing an order
D. the cost of insurance - ✔✔D. the cost of insurance
✔✔A P system has an advantage over the Q system
QUESTIONS AND SOLUTIONS GUARANTEE A+
✔Which of the following costs is NOT considered an inventory holding (or carrying)
cost?
A. inventory storage costs
B. inventory transportation costs
C. inventory shrinkage costs
D. inventory handling costs - ✔✔B. inventory transportation costs
✔✔Which of these statements is NOT required in order for the EOQ model to be a
reasonable approach?
A. The demand rate is known and constant.
B. No constraints are placed on the size of each lot.
C. The setup/ordering cost must exceed the annual holding cost of one unit.
D. The lead time is known and constant. - ✔✔C. The setup/ordering cost must exceed
the annual holding cost of one unit.
✔✔For class C SKUs, why is much looser inventory control appropriate?
A. The inventory holding cost of class C SKUs tends to be low.
B. Class C SKUs tend to have very low demand.
C. A stockout of a class C SKU is not as crucial as for a class A SKU.
D. All of the above. - ✔✔A. The inventory holding cost of class C SKUs tends to be low.
✔✔A perpetual inventory system requires that
A. inventory is always on order.
B. inventory records are always current.
C. inventory is constantly being produced.
D. inventory is always in stock. - ✔✔B. inventory records are always current.
✔✔What is the primary lever to reduce cycle inventory?
A. reduce the lot sizes
B. improve demand forecasts
C. use flexible automation
D. place orders closer to the time when they must be received - ✔✔A. reduce the lot
sizes
✔✔A visual version of the Q system
A. is the P system.
, B. is the ABC system.
C. is the R system.
D. is the two-bin system. - ✔✔D. is the two-bin system
✔✔A form of shrinkage called ________ occurs when inventory cannot be used or sold
at full value, owing to model changes, engineering modifications, or unexpectedly low
demand.
A. obsolescence
B. deterioration
C. life-cycle shrink
D. pilferage - ✔✔A. obsolescence
✔✔A reorder point will fall if
A. the setup cost rises.
B. the lead time falls.
C. the variance of demand rises.
D. the chance of a stockout falls. - ✔✔B. the lead time falls.
✔✔The Mickey and Mouse Cat Food Factory runs an aggressive marketing campaign
and much to the delight, orders surge to twice their previous level. If their operations
manager uses an EOQ policy, what is the impact on the order quantity?
A. The order quantity will double.
B. The order quantity will be 50% lower.
C. The order quantity will be 70% higher.
D. The order quantity will be 40% higher. - ✔✔D. The order quantity will be 40% higher.
✔✔Matching the demand rate with the production rate is a primary lever to reduce
A. cycle inventory.
B. pipeline inventory.
C. work-in-process inventory.
D. anticipation inventory. - ✔✔D. anticipation inventory.
✔✔Which of the following is NOT considered a pressure to hold large inventories?
A. the need to increase machine utilization
B. the potential to reduce stockouts
C. the cost of placing an order
D. the cost of insurance - ✔✔D. the cost of insurance
✔✔A P system has an advantage over the Q system
