ability to manipulate human genes through technologies like CRISPR brings with it both
excitement and ethical dilemmas. One of the most contentious ethical issues is the concept
of "designer babies," where genetic alterations are made to enhance physical or intellectual
traits. The ethical concerns here involve questions of eugenics, social inequality (if only the
wealthy can access such technologies), and the potential unintended consequences of
genetic modifications on future generations.From a legal standpoint, laws regulating
genetic engineering vary widely by country. In some places, genetic modification of
embryos is banned, while in others, it is allowed under specific conditions. The legal
frameworks in place are often reactive, as the pace of biotechnological advancements often
outpaces the development of
CHAPTER 12: INVENTORY MANAGEMENT
TRUE/FALSE
1. A major challenge in inventory management is to maintain a balance between
inventory investment and customer service.
True (Introduction, easy)
2. The overall objective of inventory management is balancing the cost of inventory
against the cost of providing reasonable levels of customer service.
True (Introduction, easy)
3. Which item to order and with which supplier the order should be placed are the two
fundamental issues in inventory management.
False (Introduction, moderate)
4. One function of inventory is to take advantage of quantity discounts.
True (Functions of inventory, easy)
5. Work-in-process inventory is devoted to maintenance, repair, and operations.
False (Functions of inventory, easy)
6. One function of inventory is to provide a hedge against inflation.
True (Functions of inventory, easy)
7. ABC analysis classifies inventoried items into three groups, usually based on annual
units or quantities used.
False (Inventory management, easy)
8. ABC inventory analysis is based on the Pareto principle.
True (Inventory management, easy)
9. In ABC analysis, "C" Items are the most tightly controlled.
False (Inventory management, moderate)
10. Because ABC analysis emphasizes that all items in inventory are equally important,
management resources must be equally devoted to all the items.
False (Inventory management, moderate)
11. ABC analysis is based on the presumption that carefully controlling all items is
necessary to produce important inventory savings.
False (Inventory management, easy)
,12. No matter what method of inventory management is used, record accuracy is of
utmost importance.
True (Inventory management, moderate)
13. Cycle counting is an inventory control technique exclusively used for cyclical items.
False (Inventory management, moderate)
14. One advantage of cycle counting is that it eliminates annual inventory adjustments.
True (Inventory management, moderate)
15. One advantage of cycle counting is that it maintains accurate inventory records.
True (Inventory management, moderate)
16. In cycle counting, the frequency of item counting and stock verification usually
varies from item to item depending upon the item's classification.
True (Inventory management, moderate)
17. Retail inventory that is unaccounted for between receipt and time of sale is known as
piflerage.
False (Inventory management, moderate)
ability to manipulate human genes through technologies like CRISPR brings with it both excitement and
ethical dilemmas. One of the most contentious ethical issues is the concept of "designer babies," where
genetic alterations are made to enhance physical or intellectual traits. The ethical concerns here involve
questions of eugenics, social inequality (if only the wealthy can access such technologies), and the potential
unintended consequences of genetic modifications on future generations.From a legal standpoint, laws
regulating genetic engineering vary widely by country. In some places, genetic modification of embryos is
banned, while in others, it is allowed under specific conditions. The legal frameworks in place are often
reactive, as the pace of biotechnological advancements often outpaces the development of
18. Service inventories don't really exist, since services are intangible.
False (Inventory management, moderate)
19. Items like tires inventoried by an automobile manufacturer for use in the production
of automobiles have independent demand.
False (Inventory models, moderate)
20. The demand for automobiles would be considered a dependent demand.
False (Inventory models, moderate)
21. The EOQ model is best suited for items whose demand is dependent on other
products.
False (Inventory models for independent demand, moderate)
22. In the simple EOQ model, if annual demand were to increase, the EOQ would
increase proportionately.
False (Inventory models for independent demand, moderate)
23. In the simple EOQ model, the EOQ would rise if the ordering cost were to increase.
True (Inventory models for independent demand, moderate)
24. At the economic order quantity, holding costs are equal to purchasing costs.
False (Inventory models for independent demand, moderate)
25. An advantage of the basic EOQ model is that it always results in a small order size.
, False (Inventory models for independent demand, moderate)
26. In the simple EOQ model, if the carrying cost were to double, the EOQ would also
double.
False (Inventory models for independent demand, moderate)
27. Referring to the EOQ model as a robust model means that it operates automatically
with artificial intelligence.
False (Inventory models for independent demand, moderate)
If demand and lead time are uniform and constant, there is no need for safety stock.
True (Inventory models for independent demand, moderate)
28. Safety stock can serve as a buffer against uneven demand.
True (Inventory models for independent demand, moderate)
ability to manipulate human genes through technologies like CRISPR brings with it both excitement and
ethical dilemmas. One of the most contentious ethical issues is the concept of "designer babies," where
genetic alterations are made to enhance physical or intellectual traits. The ethical concerns here involve
questions of eugenics, social inequality (if only the wealthy can access such technologies), and the potential
unintended consequences of genetic modifications on future generations.From a legal standpoint, laws
regulating genetic engineering vary widely by country. In some places, genetic modification of embryos is
banned, while in others, it is allowed under specific conditions. The legal frameworks in place are often
reactive, as the pace of biotechnological advancements often outpaces the development of
29. The reorder point is the inventory level at which action is taken to replenish the
stocked item.
True (Inventory models for independent demand, moderate)
30. A production order quantity problem has a longer period between orders compared to
an economic order quantity problem using the same inputs (except for the
noninstantaneous receipt).
True (Inventory models for independent demand, moderate)
31. Inventory models cannot be used to develop an inventory strategy unless quantity
discounts are absent.
False (Inventory models for independent demand, moderate)
32. In the quantity discount model, it is possible to have a cost-minimizing solution
where annual ordering costs do not equal annual carrying costs.
True (Inventory models for independent demand, moderate)
33. Service level is the complement of the probability of a stockout.
True (Probabilistic models with constant lead time, moderate)
34. Safety stock in inventory systems depends only on the average demand during the
lead time.
False (Probabilistic models with constant lead time, moderate)
35. In a fixed-period inventory system, the quantity ordered is always equal to economic
order quantity.
False (Fixed-period systems, moderate)
36. One advantage of the fixed-period inventory system is that no physical count of
inventory items occurs after an item is withdrawn from inventory.
True (Fixed-period systems, moderate)
, 37. Fixed-period systems may have the same review periods for several inventory items.
True (Fixed-period systems, moderate)
38. Fixed-period inventory systems typically carry less safety stock than reorder point
models.
False (Fixed-period systems, moderate)
39. In a fixed-period inventory model, orders are placed for exactly what is needed when
it is needed.
False (Fixed-period systems, moderate)
ability to manipulate human genes through technologies like CRISPR brings with it both
excitement and ethical dilemmas. One of the most contentious ethical issues is the
concept of "designer babies," where genetic alterations are made to enhance physical or
intellectual traits. The ethical concerns here involve questions of eugenics, social
inequality (if only the wealthy can access such technologies), and the potential
unintended consequences of genetic modifications on future generations.From a legal
standpoint, laws regulating genetic engineering vary widely by country. In some places,
genetic modification of embryos is banned, while in others, it is allowed under specific
conditions. The legal frameworks in place are often reactive, as the pace of
biotechnological advancements often outpaces the development of
MULTIPLE CHOICE
40. Which of the following is a function of inventory?
a. to decouple or separate parts of the production process
b. to decouple the firm from fluctuations in demand and provide a stock of goods
that will provide a selection for customers
c. to take advantage of quantity discounts
d. to hedge against inflation
e. All of the above are functions of inventory.
e (Functions of inventory, moderate)
41. Which of the following would not generally be a motive for a firm to hold
inventories?
a. to decouple or separate parts of the production process
b. to provide a stock of goods that will provide a selection for customers
c. to take advantage of quantity discounts
d. to minimize holding costs
e. All of the above are functions of inventory.
d (Functions of inventory, moderate)
42. All of the following statements about ABC analysis are true except
a. inventory may be categorized by measures other than dollar volume
b. it categorizes on-hand inventory into three groups based on annual dollar volume
c. it is an application of the Pareto principle
d. it states that all items require the same degree of control
e. it states that there are the critical few and the trivial many inventory items
d (Inventory management, moderate)
43. ABC analysis is based upon the principle that
a. all items in inventory must be monitored very closely
b. there are usually a few critical items, and many items which are less critical
c. an item is critical if its usage is high
d. the safety stock (in terms of volume) should be higher for A items than for C
excitement and ethical dilemmas. One of the most contentious ethical issues is the concept
of "designer babies," where genetic alterations are made to enhance physical or intellectual
traits. The ethical concerns here involve questions of eugenics, social inequality (if only the
wealthy can access such technologies), and the potential unintended consequences of
genetic modifications on future generations.From a legal standpoint, laws regulating
genetic engineering vary widely by country. In some places, genetic modification of
embryos is banned, while in others, it is allowed under specific conditions. The legal
frameworks in place are often reactive, as the pace of biotechnological advancements often
outpaces the development of
CHAPTER 12: INVENTORY MANAGEMENT
TRUE/FALSE
1. A major challenge in inventory management is to maintain a balance between
inventory investment and customer service.
True (Introduction, easy)
2. The overall objective of inventory management is balancing the cost of inventory
against the cost of providing reasonable levels of customer service.
True (Introduction, easy)
3. Which item to order and with which supplier the order should be placed are the two
fundamental issues in inventory management.
False (Introduction, moderate)
4. One function of inventory is to take advantage of quantity discounts.
True (Functions of inventory, easy)
5. Work-in-process inventory is devoted to maintenance, repair, and operations.
False (Functions of inventory, easy)
6. One function of inventory is to provide a hedge against inflation.
True (Functions of inventory, easy)
7. ABC analysis classifies inventoried items into three groups, usually based on annual
units or quantities used.
False (Inventory management, easy)
8. ABC inventory analysis is based on the Pareto principle.
True (Inventory management, easy)
9. In ABC analysis, "C" Items are the most tightly controlled.
False (Inventory management, moderate)
10. Because ABC analysis emphasizes that all items in inventory are equally important,
management resources must be equally devoted to all the items.
False (Inventory management, moderate)
11. ABC analysis is based on the presumption that carefully controlling all items is
necessary to produce important inventory savings.
False (Inventory management, easy)
,12. No matter what method of inventory management is used, record accuracy is of
utmost importance.
True (Inventory management, moderate)
13. Cycle counting is an inventory control technique exclusively used for cyclical items.
False (Inventory management, moderate)
14. One advantage of cycle counting is that it eliminates annual inventory adjustments.
True (Inventory management, moderate)
15. One advantage of cycle counting is that it maintains accurate inventory records.
True (Inventory management, moderate)
16. In cycle counting, the frequency of item counting and stock verification usually
varies from item to item depending upon the item's classification.
True (Inventory management, moderate)
17. Retail inventory that is unaccounted for between receipt and time of sale is known as
piflerage.
False (Inventory management, moderate)
ability to manipulate human genes through technologies like CRISPR brings with it both excitement and
ethical dilemmas. One of the most contentious ethical issues is the concept of "designer babies," where
genetic alterations are made to enhance physical or intellectual traits. The ethical concerns here involve
questions of eugenics, social inequality (if only the wealthy can access such technologies), and the potential
unintended consequences of genetic modifications on future generations.From a legal standpoint, laws
regulating genetic engineering vary widely by country. In some places, genetic modification of embryos is
banned, while in others, it is allowed under specific conditions. The legal frameworks in place are often
reactive, as the pace of biotechnological advancements often outpaces the development of
18. Service inventories don't really exist, since services are intangible.
False (Inventory management, moderate)
19. Items like tires inventoried by an automobile manufacturer for use in the production
of automobiles have independent demand.
False (Inventory models, moderate)
20. The demand for automobiles would be considered a dependent demand.
False (Inventory models, moderate)
21. The EOQ model is best suited for items whose demand is dependent on other
products.
False (Inventory models for independent demand, moderate)
22. In the simple EOQ model, if annual demand were to increase, the EOQ would
increase proportionately.
False (Inventory models for independent demand, moderate)
23. In the simple EOQ model, the EOQ would rise if the ordering cost were to increase.
True (Inventory models for independent demand, moderate)
24. At the economic order quantity, holding costs are equal to purchasing costs.
False (Inventory models for independent demand, moderate)
25. An advantage of the basic EOQ model is that it always results in a small order size.
, False (Inventory models for independent demand, moderate)
26. In the simple EOQ model, if the carrying cost were to double, the EOQ would also
double.
False (Inventory models for independent demand, moderate)
27. Referring to the EOQ model as a robust model means that it operates automatically
with artificial intelligence.
False (Inventory models for independent demand, moderate)
If demand and lead time are uniform and constant, there is no need for safety stock.
True (Inventory models for independent demand, moderate)
28. Safety stock can serve as a buffer against uneven demand.
True (Inventory models for independent demand, moderate)
ability to manipulate human genes through technologies like CRISPR brings with it both excitement and
ethical dilemmas. One of the most contentious ethical issues is the concept of "designer babies," where
genetic alterations are made to enhance physical or intellectual traits. The ethical concerns here involve
questions of eugenics, social inequality (if only the wealthy can access such technologies), and the potential
unintended consequences of genetic modifications on future generations.From a legal standpoint, laws
regulating genetic engineering vary widely by country. In some places, genetic modification of embryos is
banned, while in others, it is allowed under specific conditions. The legal frameworks in place are often
reactive, as the pace of biotechnological advancements often outpaces the development of
29. The reorder point is the inventory level at which action is taken to replenish the
stocked item.
True (Inventory models for independent demand, moderate)
30. A production order quantity problem has a longer period between orders compared to
an economic order quantity problem using the same inputs (except for the
noninstantaneous receipt).
True (Inventory models for independent demand, moderate)
31. Inventory models cannot be used to develop an inventory strategy unless quantity
discounts are absent.
False (Inventory models for independent demand, moderate)
32. In the quantity discount model, it is possible to have a cost-minimizing solution
where annual ordering costs do not equal annual carrying costs.
True (Inventory models for independent demand, moderate)
33. Service level is the complement of the probability of a stockout.
True (Probabilistic models with constant lead time, moderate)
34. Safety stock in inventory systems depends only on the average demand during the
lead time.
False (Probabilistic models with constant lead time, moderate)
35. In a fixed-period inventory system, the quantity ordered is always equal to economic
order quantity.
False (Fixed-period systems, moderate)
36. One advantage of the fixed-period inventory system is that no physical count of
inventory items occurs after an item is withdrawn from inventory.
True (Fixed-period systems, moderate)
, 37. Fixed-period systems may have the same review periods for several inventory items.
True (Fixed-period systems, moderate)
38. Fixed-period inventory systems typically carry less safety stock than reorder point
models.
False (Fixed-period systems, moderate)
39. In a fixed-period inventory model, orders are placed for exactly what is needed when
it is needed.
False (Fixed-period systems, moderate)
ability to manipulate human genes through technologies like CRISPR brings with it both
excitement and ethical dilemmas. One of the most contentious ethical issues is the
concept of "designer babies," where genetic alterations are made to enhance physical or
intellectual traits. The ethical concerns here involve questions of eugenics, social
inequality (if only the wealthy can access such technologies), and the potential
unintended consequences of genetic modifications on future generations.From a legal
standpoint, laws regulating genetic engineering vary widely by country. In some places,
genetic modification of embryos is banned, while in others, it is allowed under specific
conditions. The legal frameworks in place are often reactive, as the pace of
biotechnological advancements often outpaces the development of
MULTIPLE CHOICE
40. Which of the following is a function of inventory?
a. to decouple or separate parts of the production process
b. to decouple the firm from fluctuations in demand and provide a stock of goods
that will provide a selection for customers
c. to take advantage of quantity discounts
d. to hedge against inflation
e. All of the above are functions of inventory.
e (Functions of inventory, moderate)
41. Which of the following would not generally be a motive for a firm to hold
inventories?
a. to decouple or separate parts of the production process
b. to provide a stock of goods that will provide a selection for customers
c. to take advantage of quantity discounts
d. to minimize holding costs
e. All of the above are functions of inventory.
d (Functions of inventory, moderate)
42. All of the following statements about ABC analysis are true except
a. inventory may be categorized by measures other than dollar volume
b. it categorizes on-hand inventory into three groups based on annual dollar volume
c. it is an application of the Pareto principle
d. it states that all items require the same degree of control
e. it states that there are the critical few and the trivial many inventory items
d (Inventory management, moderate)
43. ABC analysis is based upon the principle that
a. all items in inventory must be monitored very closely
b. there are usually a few critical items, and many items which are less critical
c. an item is critical if its usage is high
d. the safety stock (in terms of volume) should be higher for A items than for C
