SOM 306 FINAL Verified Multiple Choice and
Conceptual Actual Frequently Tested Exam
Questions With Reviewed 100%
Correct Detailed Answers
Guaranteed Pass!!Current Update!!
1. What is inventory?
A) A list of company employees and salaries
B) A stock of any item or resource used within an organization
C) The financial value of company assets
D) A record of customer orders
2. Which of the following correctly identifies the types of inventory in a bread-
making process?
A) Finished goods only
B) Raw materials, semi-finished goods (work-in-process), and finished goods
C) Supplies, equipment, and facilities
D) Distribution, retail, and wholesale
3. What are the purposes of carrying inventory? - ANSWER 1. To meet
customer demands immediately from stock
2. To smooth production requirements
3. To Protect against stockouts (demand uncertainty, supply uncertainty)
4. To take advantage of economic lot size (spread of fixed costs over more units,
quantity discounts)
,5. To protect against loss from price increases (purchase more than needed in
anticipation of price increases)
4. What are inventory-related costs? - ANSWER 1. Acquisition costs (purchase
costs, variable production costs)
2. Inventory-holding or carrying costs (costs of capital, physical storage costs)
3. Shortage costs (lost profit, loss of goodwill)
4. Production setup costs (Costs of setting up production tools and equipment)
5. Order costs (costs of someone placing an order)
6. Production setup costs and ordering costs are fixed costs incurred per order
regardless of order quantity
5. Which of the following best describes the purpose of maintaining inventory?
A) To increase production costs
B) To meet customer demand, smooth production, protect against stockouts,
and take advantage of bulk pricing
C) To minimize available resources
D) To limit cash flow within operations
6. What is one reason companies maintain a buffer stock?
A) To create unnecessary waste
B) To reduce product quality
C) To protect against stockouts or unexpected demand increases
D) To reduce supplier relationships
7. Which type of inventory would include dough being mixed for bread
production?
, A) Raw materials
B) Work-in-process inventory
C) Finished goods
D) Maintenance supplies
6. Which of the following is NOT a main inventory-related cost?
A) Ordering cost
B) Marketing cost
C) Holding cost
D) Shortage cost
7. What are the main categories of inventory-related costs?
A) Administrative, marketing, and HR costs
B) Acquisition, holding, shortage, production setup, and ordering costs
C) Material, labor, and advertising costs
D) Depreciation, capital, and taxes
8. What are acquisition costs?
A) Costs related to employee recruitment and training
B) Purchase costs and variable production costs
C) Inventory disposal costs
D) Costs related to product transportation
9. What are inventory-holding costs primarily composed of?
A) Advertising and promotion expenses
B) Cost of capital and physical storage costs
C) Production and labor costs
D) Supplier management expenses
Conceptual Actual Frequently Tested Exam
Questions With Reviewed 100%
Correct Detailed Answers
Guaranteed Pass!!Current Update!!
1. What is inventory?
A) A list of company employees and salaries
B) A stock of any item or resource used within an organization
C) The financial value of company assets
D) A record of customer orders
2. Which of the following correctly identifies the types of inventory in a bread-
making process?
A) Finished goods only
B) Raw materials, semi-finished goods (work-in-process), and finished goods
C) Supplies, equipment, and facilities
D) Distribution, retail, and wholesale
3. What are the purposes of carrying inventory? - ANSWER 1. To meet
customer demands immediately from stock
2. To smooth production requirements
3. To Protect against stockouts (demand uncertainty, supply uncertainty)
4. To take advantage of economic lot size (spread of fixed costs over more units,
quantity discounts)
,5. To protect against loss from price increases (purchase more than needed in
anticipation of price increases)
4. What are inventory-related costs? - ANSWER 1. Acquisition costs (purchase
costs, variable production costs)
2. Inventory-holding or carrying costs (costs of capital, physical storage costs)
3. Shortage costs (lost profit, loss of goodwill)
4. Production setup costs (Costs of setting up production tools and equipment)
5. Order costs (costs of someone placing an order)
6. Production setup costs and ordering costs are fixed costs incurred per order
regardless of order quantity
5. Which of the following best describes the purpose of maintaining inventory?
A) To increase production costs
B) To meet customer demand, smooth production, protect against stockouts,
and take advantage of bulk pricing
C) To minimize available resources
D) To limit cash flow within operations
6. What is one reason companies maintain a buffer stock?
A) To create unnecessary waste
B) To reduce product quality
C) To protect against stockouts or unexpected demand increases
D) To reduce supplier relationships
7. Which type of inventory would include dough being mixed for bread
production?
, A) Raw materials
B) Work-in-process inventory
C) Finished goods
D) Maintenance supplies
6. Which of the following is NOT a main inventory-related cost?
A) Ordering cost
B) Marketing cost
C) Holding cost
D) Shortage cost
7. What are the main categories of inventory-related costs?
A) Administrative, marketing, and HR costs
B) Acquisition, holding, shortage, production setup, and ordering costs
C) Material, labor, and advertising costs
D) Depreciation, capital, and taxes
8. What are acquisition costs?
A) Costs related to employee recruitment and training
B) Purchase costs and variable production costs
C) Inventory disposal costs
D) Costs related to product transportation
9. What are inventory-holding costs primarily composed of?
A) Advertising and promotion expenses
B) Cost of capital and physical storage costs
C) Production and labor costs
D) Supplier management expenses
