Inventory Management MCQ with Answers

MCQ on Inventory Management: Multiple choice questions with answers for MBA, BBA, and Finance Management students of various institutes

Inventory Management

MCQ on Inventory Management with answers

1. Which of the following is a type of inventory system that is used to manage independent demand items?
A. Order point system
B. Material Requirements Planning
C. Time-phased Order Point
D. Enterprise Resource Planning
Answer: (C)

2. Effective inventory management minimizes the investment in inventory by effectively meeting the___.
A. Functional requirement
B. Customer requirements
C. Process reliability
D. Sales forecasting of a firm
Answer: (A)

3. To achieve ___ in purchasing and transportation, goods may be purchased in larger quantities than the actual demand.
A. Continuation
B. Quality
C. Cost efficiency
D. Potential value
Answer: (C)

4. Which of the following is the objective of the enterprise resource planning system?
A. Manage purchase orders
B. Control the flow of dependent demand inventories
C. Organise external management information
D. Balance supply and demand
Answer: (D)

5. Which of the following models is used to calculate the timing of the inventory order?
A. Economic order quantity model
B. Fixed order quantity model
C. Reorder point model
D. Fixed order inventory model
Answer: (C)

6. The type of inventory method that comprises a greater number of accounting transactions is known as ___.
A. Periodic inventory method
B. Perpetual inventory system
C. Finished goods inventory method
D. Fixed order period inventory system
Answer: (B)

7. In the ABC Analysis system the B category stands for___.
A. Outstanding importance in value
B. Comparatively unimportant in value
C. Comparatively important in value
D. Average importance in value
Answer: (D)

8. Which among the following is a quantity of a specific item that is ordered from the supplier and issued as a standard quantity to the production process?
A. Safety stock
B. Lot size
C. Standard deviation
D. Inventory control
Answer: (B)

9. The economic order quantity formula is taken using ___.
A. Differential calculus
B. Integral calculus
C. Vector calculus
D. Multivariate analysis
Answer: (A)

10. Which among the following components is calculated as the sum of the fixed costs that happen each time an item is ordered?
A. Carrying cost
B. Order cost
C. Holding cost
D. Storing cost
Answer: (B)

11. The price reductions offered to customers for large orders, to encourage them to purchase in large quantities is known as ___.
A. Freebies
B. Quantity discounts
C. Normal discounts
D. Premiums
Answer: (B)

12. A company that maintains a sufficient safety margin by having extra inventory against certain situations is termed as ___.
A. inventory
B. lot size
C. safety stock
D. lead
Answer: (C)

13. Identify the mode of production that is widely used in a production model and in the assembly operations?
A. Round-robin mode
B. Batch mode
C. Grid mode
D. Parallel mode
Answer: (B)

14. Which among the following costs is the expense of storing inventory for a specified period of time?
A. Purchasing cost
B. Carrying cost
C. Financial cost
D. Storing cost
Answer: (B)

15. Which of the following is the ratio of net profit to net sales?
A. Net Operating ratio
B. Gross profit ratio
C. Pretax Profit ratio
D. Net profit ratio
Answer: (D)

16. A method that uses a predetermined overhead rate to allocate overhead costs is known as ___.
A. Plant-wide allocation
B. Shipping allocation
C. Department allocation
D. Production-wide allocation
Answer: (A)

17. Which of the following costs is estimated by multiplying the quantity determined in the bill of materials to the cost of each component?
A. Operating
B. Production
C. Labour
D. Material
Answer: (D)

18. A long-term solvency or leverage ratio is called ___.
A. Net profit ratio
B. Proprietary ratio
C. Activity ratio
D. Stock turnover ratio
Answer: (B)

19. Which among the following systems provides a process that enables one to track product movement throughout the company?
A. Item tracker system
B. Product locator system
C. Memory locator system
D. Real-time locator system
Answer: (B)

20. Pareto’s law is related to ___ placement theory.
A. Item stratification
B. Special consideration
C. Family grouping
D. Inventory stratification
Answer: (D)

21. Identify the system that allows you to have strong control over items without necessarily updating the location records?
A. Zoning systems
B. Fixed locator system
C. Zone locator system
D. Combining system
Answer: (B)

22. Manufacturers actually print the labels provided to them and serial numbers to aid in ___.
A. Quality audit
B. Quality control
C. Auditing process
D. Product quality
Answer: (B)

23. The method of item placement that can accidentally substitute an item onto another is ___.
A. Family grouping
B. Part grouping
C. ABC categorization
D. Category mapping
Answer: (A)

24. The movements of stock must be controlled with information regarding ___.
A. Space utilization
B. Order status
C. Labour utilization
D. Material protection
Answer: (B)

25. An alteration to the method of setting up zones or areas in the depot and assigning it to one person to each area is called ___.
A. Zone logic
B. Zone allocation
C. Sequential zone system
D. Random zone system
Answer: (C)

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