DSP: Chapter 1 - Inventory Policies

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DSP: Chapter 1 - Inventory Policies
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2015-12-29 10:49:16
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Manufacturing Inventory subclassifications Service Valuation Performance Metrics Lots Sizing Safety Stock Scheduling
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Inventory Policies
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DSP: Chapter 1 - Inventory Policies Detailed Scheduling and Planning
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  1. What is DSP?
    Detailed Scheduling and Planning
  2. What is the largest asset on a manufacturing company's balance sheet?
    Inventory
  3. Manufacturing is the business of tranforming raw materials into ?

    A) Inventory
    B) Detailed Scheduling and Planning
    C) Finished Goods
    D) Detailed Scheduling and Planning
    C) Finished Goods
    (this multiple choice question has been scrambled)
  4. When is inventory converted to cash?
    When it is sold.
  5. What are the major types of manufacturing inventory?
    • 1. Raw material
    • 2. Work in Process (WIP)
    • 3. Finished goods and distribution inventories
    • 4. Maintenance, repair, and operating (MRO) supplies
  6. True or False:
    Detailed scheduling and planning balances inventory investment objectives with customer service and production efficiency objectives.
    True
  7. What is raw material?
    purchased items or extracted materials that are converted into components and products during the manufacturing process
  8. T or F
    Raw materials are the lowest level components of the bill of material
    True
  9. T or F
    In lean manufacturing environments, raw material inventories are very low
    True
  10. What is WIP?
    Goods in various stages of  completion in a production process
  11. What manufacturing processes would transform raw materials into finished products in a series of steps?
    Intermittent (job shop) or batch
  12. What does WIP include?
    • raw material that has been released for processing
    • semi finished stock and components
    • completely processed materials awaiting final inspection and acceptance as finished goods inventory
  13. Manufacturing lead times and WIP decrease in the following types of production layouts:
    • continuous flow
    • Cellular
    • Continuous one piece flow
  14. What is a finished good?
    This is an end item that is sold by a company as a completed product.
  15. What is the purpose of MRO supplies?
    support general operations and maintenance
  16. What does MRO supplies include?
    • cutting and lubricating oils
    • machine spare parts
    • glue
    • tape
    • office and janitorial supplies
    • spare parts
  17. What are the sub-classifications of Manufacturing inventory?
    • 1. operating inventory
    • 2. Excess inventory
    • 3. Inactive Inventory
    • 4. Obsolete Inventory
    • 5. Scrap
  18. What is excess inventory?
    Any inventory in the system that exceeds the minimum amount necessary to achieve the desired throughput rate at the constraint or that exceeds the minimum amount necessary to achieve the desired due date. 

    Total inventory = productive inventory + protective inventory + excess inventory
  19. What are some other manufacturing inventories?
    • 1. buffers
    • 2. inventory buffers
    • 3. return goods
  20. What is inactive inventory?
    Stock that has exceeded consumption, or demand, within a defined period of time or has not been used for a defined period.
  21. What is obsolete inventory?
  22. What is inactive inventory the direct result of?
    inventory not being used within 12 - 18 months with no foreseeable future use. 

    it is an asset from an accounting perspective but incurs carrying costs
  23. what is obsolete inventory?
    inventory that is not used or sold at full value because the products are no longer produced or supported. 

    Disposing the inventory means the costs cannot be recovered through revenues: = lost revenue and reduced profit.

    Obsolete parts are removed from inventory by engineering change orders
  24. What is scrap?
    Scrap is material that is outside of specifications and is not practical to rework. 

    A scrap factor should be built into determining material requirements.
  25. What are examples of inventories that incur a cost but whose overall impact on inventory investment is positive?
    buffer inventory
  26. What is buffer inventory?
    a quantity of raw materials or semifinished goods requiring further processing, often purposely maintained at a work center to achieve desired throughput.
  27. T or F 

    Constant adjustments to minimize inventory investment costs are considered to be a good practice
    True
  28. T or F
    Buffers (including safety stock) can be used to address fluctuations in customer demand and supply at each workstation or process and at the shipping point or finished goods level.
    True
  29. What is Inventory Buffer?
    applies to inventory used to protect the throughput of an operation or the schedule from delays in delivery, quality problems, and delivery of incorrect quantities.
  30. What are good reasons for return goods?
    • customer quality demands
    • damage or defects
    • recalls
    • over forecasting
    • seasonal demand
    • obsolete inventory
    • repair and remanufacturing
    • recycling
  31. What are dispositions for return goods?
    • Correct defects
    • replace
    • return for resale
    • repair or remanufacture for resale
    • sale into other markets
    • convert to reusable components
    • reuse in current form
  32. Are return goods a class of goods handled by reverse logistics?
    yes
  33. What is inventory in the service industry?
    • Do not typically transform raw materials into finished products
    • may customize products to sell to consumers
    • Often provide after sale service
  34. What is Goods and Services?
    • Service may facilitate sales of products (food sold at movies)
    • products may facilitate sale of services (after sale automobile service)
  35. What is hard inventory?
    • Materials transformed into goods (restaurant meal ingredients)
    • Materials not transformed (retail store items, auto parts)
  36. What are perishable goods?
    • Newspapers
    • event brochures
  37. What are distressed goods?
    • products that are damaged or close to expiration date
    • Cannot be sold at full price
  38. What are the two types of hard goods?
    • Those that involve some raw material transformation, such as restaurant meals, customer clothing and baked goods
    • materials that are not transformed during the service transaction, such as goods bought from a retail store, automobile parts installed by an automotive repair shop or replacement parts used in a surgical transplant operation.
  39. T or F
    Perishable inventory is found in both manufacturing and service industries?
    True
  40. What are two types of inventory policies?
    • Aggregate level
    • item level
  41. What are aggregate level inventory policies?
    associated with the impact of inventory management on the overall financial performance of the company

    Establishing the overall level (i.e. $ level) of inventory desired and implementing controls to achieve this goal.
  42. What 3 topics are associated with Aggregate level inventory policies?
    • resolving sales and operational conflicts
    • inventory valuation
    • performance metrics
  43. What are item level inventory policies?
    associated with materials and operations planning and execution. Two examples are lot sizing and safety stock
  44. What are the conflicting objectives?
    • 1. High customer service levels - high product variety and quality, and shorter lead times and production flexibility to respond to customer orders.
    • 2. efficient plant operations - long production runs to minimize changeovers and reduce per unit production costs; high raw material inventory levels at low costs.
    • 3. Minimum inventory investment - low levels of inventory and high inventory turns, or inventory turnover.
    • 4. Real cost of materials - lowest purchase price versus total life cycle and environmental costs.
  45. T or F
    Tradeoffs should be discussed during the priority and capacity planning phases of manufacturing planning control  like S&OP meetings
    True
  46. resolution of conflicting objectives does not always have to be accomplished by tradeoffs - 

    If Lean and TOC production approaches are used, they enable more than one objective to be achieved by increasing supply chain velocity through a number of methods. What do these include?
    • 1. eliminating wasteful movements and procedures in the production process and fostering a culture of employee empowerment
    • 2. ensuring a continuous flow of production from raw materials to finished prodcuts by buffering critically constrained resources to maintain full utilization
    • 3. establishing supplier relationships and supply management practices that synchronize delivery of raw materials to the point of use at time of production. 

    These result in faster throughput and shorter manufacturing lead times, allowing a company to lessen dependence on forecasts and produce to customer orders

    Resulting in : the reduction of the amount of inventory needed to support customer service objectives and lowers production costs.
  47. T or F
    MRO supplies are not included as assets, but are considered expenses.
    True
  48. Inventory is considered a short term current asset
    True
  49. Why is understanding the value of inventory in all stages important?
    • Enables you to determine the impact of inventory on the financial condition of the business
    • provides information necessary for strategic and policy decisions (i.e. inventory turns, performance metrics).
    • Also useful in determining operational approaches to order quantities, safety stock, and replenishment.
  50. What are the 3 most popular cost systems for manufacturing?
    • project
    • process
    • job order costing
  51. What are the 3 types of costs accumulated for inventory valuation?
    • labor
    • material
    • factory overhead
  52. what is project costing?
    an accounting method of assigning valuations based on services performed on a project basis. 

    It employs some special rules such as % of completion revenue recognition - as major projects take more than a year to complete
  53. what is job order costing?
    Custom engineer to order and make to order job shop manufacturing companies tend to use job cost, because it it important to know the cost accumulation of each different job.
  54. What is process costing?
    Companies with flow production tend to use a process costing system, which enables them to capture the cost to process a batch or group of items.
  55. What sort of costing is sued for retail and distribution environments?
    Because they do not need to accumulate cost to manufacture, but they do need to rack inventory costs as they buy and sell goods - they should use process costing.
  56. What are 7 types of inventory valuation?
    • 1. Specific identification
    • 2. Average Cost
    • 3. Standard Cost
    • 4. Actual Cost
    • 5. Transfer Cost
    • 6. First in, First Out (FIFO)
    • 7. Last in, First out (LIFO)
  57. What are landed costs?
    When freight costs are added to the acquisition costs for retail stores
  58. What is specific identification inventory valuation?
    Keeps track of the units from the beginning inventory and the units purchased, resulting in identification of the purchase cost of each item.

    Tracking is done by coding or serial number identification. 

    Best used for expensive items, rather than for low or frequently changing unit costs, and can be used to determine actual cost.
  59. What are the 3 types of manufacturing inventory accounts?
    • 1. materials
    • 2. WIP
    • 3. Finished Goods
  60. What is Average Cost inventory valuation?
    the cost of goods sold and ending inventory are based on the average of the actual costs paid for each unit produced or purchased. 

    The average cost applies to all of the items available fore sale during the period
  61. What is standard cost inventory valuation?
    a single value is selected for an inventory item that is reasonable and often based on historical or anticipated costs. 

    The difference between actual costs incurred and standard costs then is reported in the form of a various from the standard. 

    Reports the inventory asset and the cost of goods sold at the same value. 

    Reviewed and updated annually
  62. What is actual cost inventory valuation?
    used when there is a means of tracking the specific costs of each item, such as some form of lot control, to a specific purchase order or production run. 

    used for custom items or unique items such as expensive jewelry.
  63. What is transfer cost and price inventory valuation?
    Transfer cost and price are important in the transfer of goods between sister companies or divisions. 

    This does not effect the valuation of assets.
  64. What is FIFO?
    assumes that the oldest items in inventory are the first ones issued from inventory. 

    This tends to keep the total inventory value on the balance sheet close to the market value, but would charge cost of goods sold at the older and lower cost values.
  65. What is LIFO?
    Assumes that the latest items in inventory are the first ones being issued to production or sales. This method assigns cost of goods sold based on the most recent cost incurred. 

    This method would charge cost of goods sold at values close to the current market value. 

    This is an accounting method only, not actual physical movement.
  66. What are 4 aggregate inventory metrics
    • Inventory turns
    • days of supply
    • cash to cash cycle
    • customer service
  67. What do aggregate inventory measures indicate?
    How well inventory is managed from an overall business perspective.
  68. What two performance measures relate inventory to sales?
    • Inventory turns 
    • days of supply
  69. What is the rule of thumb for inventory turns?
    high inventory turns and low days of supply are desirable because they indicate lower levels of inventory relative to sales per period(annual, monthly,and so on)
  70. What metric measures the speed of inventory conversion into sales?
    inventory turns
  71. What is the definition of inventory turns?
    A measure of how effectively inventory is being used. 

    Inventory turns = Annual cost of goods sold / average inventory in dollars
  72. What does an increasing inventory ratio trend indicate?
    shows that less inventory is required per dollar of cost of goods sold
  73. T or F
    Inventory turns should be based on the company's annual average inventory level.
    True
  74. What metric is used to evaluation sales to inventory performance?
    Days of supply
  75. What is days of supply?
    Measures the relationships between usage (sales) and inventory

    Days of supply = inventory on hand/avg daily usage
  76. How do you calculate average daily usage?
    Average daily usage = annual sales/365 days
  77. What is cycle stock?
    the most active component of inventory
  78. When would you use the days of supply concept?
    on cycle stock
  79. what is a measure of an integrated business wide supply chain management approach to inventory management?
    Cash to cash cycle
  80. What is cash to cash cycle?
    measurement of the time span between paying for raw materials and getting paid for the product.
  81. What are two types of performance metrics for customer service?
    • operational metrics
    • customer satisfaction metrics
  82. What are operational metrics for customer service?
    focus on excellence in meeting customer requirements, such as orders shipped on time, low number of back orders, and ordering periods without a stockout.
  83. What are customer satisfaction metrics for customer service?
    focus on how a supplier supports its customers' business goals and requirements; it can be subjective
  84. What are examples of customer service metrics?
    • total cycle time from order placement to receipt on dock at the customer site
    • A focus on the requrested receipt date by the customer as opposed ot the commitment date
    • Cycle time to respond to a customer request such as schedule change or material change
    • Total deliveries of units compared to returned materials authorization (RMA's) due to quality or incorrect shipments
    • Metrics that support the total customer experience, including responsiveness, design suggestions for cost reductions or cycle time improvements, service and warranty
  85. What are two inventory policies and techniques?
    • lot sizing
    • safety stock
  86. What are lot sizing decision factors?
    • order quantity constraints and modifiers
    • inventory carrying costs
    • ordering costs
  87. What are lot sizing techniques?
    • Economic order quantity (EOQ)
    • Fixed order quantity
    • Lot for lot
    • Order n periods of supply
    • Period order quantity
  88. What do order quantity constraints do?
    Provide upper and lower order quantity limits
  89. What is the objective of upper limits in order quantity constraints?
    to control inventory investment and carrying costs.
  90. What is the objective of the lower limits of order quantity constraints?
    to prevent numerous orders for low cost items, which can lead to excessive ordering costs.
  91. What are order quantity modifiers?
    • they enable necessary adjustments to quantities that might be outside the order constraints:
    • adjust quantities to supplier lot size requirements
    • adjust quantities for price breaks
    • adjust quantities to cover an entire period's supply
    • adjust order quantities for scrap or yield factors

    Constraints take precedence over modifiers.
  92. What are major influences in order quantities in production and service environments?
    • Generic principles: inventory carrying costs and ordering costs
    • Enterprise resource planning (ERP) methods for requirements and resource planning
    • Fulfillment strategy: make to stock, make to order, assemble to order, engineer to order, 
    • Process choice: intermittent, flow, project, services
    • Lean and theory of constraints (TOC) influences on throughput and waste reduction
  93. What is L4L?
    Lot for lot

    Produce only what is needed (lean and repetitive environments)
  94. What are two categories of cost affecting order quantity decisions?
    • Inventory carrying cost
    • Ordering cost
  95. What is inventory carrying cost?
    the cost of holding inventory - usually on an annual basis
  96. what is ordering cost?
    the cost of placing an order, the cost of receiving and handling, and setup costs as applicable for orders placed internally to manufacturing
  97. What are the categories of inventory carrying costs?
    • opportunity costs 
    • storage costs (labor and equipment, space, utilities)
    • risk costs (obsolescence, damage, deterioration, lost / stolen goods, insurance and taxes)
  98. What are storage costs?
    • labor and equipment - costs for counting and material handling
    • space, including utilities and other operating costs, to accommodate the order when it first arrives, rather than just the average inventory level
  99. What are risk costs?
    • obsolescence due to engineering changes
    • damage
    • deterioration due to spoilage or shelf life policies
    • lost and stolen goods
    • insurance and taxes on inventory
  100. What is opportunity cost?
    • A company's cost of capital
    • Typically the largest portion of carrying costs
    • Represents the rate of return the company could earn from alternative investment opportunities
  101. What is ordering cost?
    • apply to purchase orders and manufacturing orders, and consist of the following:
    • costs to prepare and place an order to suppliers or the factory
    • setup costs for internal manufacturing
    • costs of receiving, handling, and inspection

    usually expressed as the cost to place a single order in absolute dollars
  102. What do ordering costs consist of?
    • clerical costs of
    • order requisition
    • release
    • monitoring
    • manufacturing setup
    • materials handling
    • inspection upon receipt
  103. True or false
    The cost of carrying inventory rises at a constant rate with order or lot size
    True
  104. True or false
    The ordering costs decreases with increases in lot size at a geometric rate.
    true
  105. What are the lot sizing technique categories?
    • Economic
    • Fixed
    • period
    • L4L
    • order n periods
    • POQ
  106. What are the asusmptions of EOQ?
    • Demand is relatively constant and known
    • item is produced or purchased in lots or batches not individually
    • ordering and inventory carrying costs are constant and known
    • replenishment occurs all at once
  107. How do you develop an annual usage?
    determine an average monthly usage rate and multiply by 12
  108. What is the optimum order quantity or (EOQ)?
    Where ordering cost and carrying cost intersect.
  109. What is fixed order quantity (FOQ)?
    • suppliers receive consistent orders with consistent quantities, but at a variable frequency (regardless of demand variability)
    • use usually is dictated by some condition related to shipping, handling, or line replenishment
    • quantity may be determined very informally, or it might be based on some form of calculation, such as EOQ
    • It is simple to use and relies on judgment and past history
    • it leads to inventory buildup
    • supplier and factory policies consist of standard lot sizes, production efficiency and capacity availability
  110. What is L4L rules characterized by?
    • only the required amount is ordered
    • order quantities change as requirements change
    • no unused lot size inventory is created
    • The technique is used:
    • for planning and time phasing dependent demand in material requirements planning (MRP)
    • for planning independent demand items in master scheduling
    • for expensive components (A items)
    • for perishable items
    • in a lean environment
  111. What are the assumptions for "Order n periods" supply?
    • The amount required to satisfy demand over a certain number of periods is ordered
    • No unused lot size inventory is created
    • The technique is used
    • for dependent and independent demand items
    • for inexpensive components (C items)
  112. True or false
    L4L is used in planning and fulfilling time phased requirements for dependent demand items, as in MRP and for independent items in Master production scheduling.
    True
  113. Order n periods is based on an estimate, judgement or forecast or it can be based on EOQ, called the POQ system.

    T or F
    True
  114. What is POQ?
    • Opposite of FOQ
    • has a fixed number of periods between orders
    • bases order quantities on forecast for the number of periods (net requirements)
    • consolidates periods of discrete demand to reduce order costs
    • starts with an EOQ calculation
  115. What is safety stock?
    a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply. In the context of master production scheduling, the additional inventory and capacity planned as protection against forecast errors and short term changes in backlog.
  116. What is the primary objective of safety stock?
    support customer service objectives
  117. How does safety stock support the customer service objectives?
    • provides incremental quantity of finished goods to protect against fluctuations in independent customer demand and especially is important in forecasting make to stock products at the master production schedule level.
    • It provides an incremental quantity of purchased raw materials and components, which is dependent demand
  118. What is safety lead time?
    planned order release due dates to be scheduled earlier by the amount of safety lead time in the planning data -used when safety stock is not desired.
  119. What is the meaning of customer service?
    • orders shipped on schedule
    • line items of orders shipped on schedule
    • dollar volume shipped on schedule
    • ordering periods without a stockout
    • backorders
  120. What are safety stock methods?
    • statistical
    • time period
    • fixed
  121. What is statistical safety stock method?
    • historical demand is assumed to be a valid indicator of future demand
    • deviations of historical demand in past periods are assumed to be distributed symmetrically - normal distribution
    • standard deviation (sigma) measures the tightness of the variations from the mean
    • (the smaller the deviation, the smaller the variations from the mean, the smaller safety stock required)
    • A safety stock value can be derived from the sigma (MAD) can be converted into standard deviation 
    • Applied to independent demand items
  122. How is safety stock value calculated statistically?
    • determine the std dev or sigma in physical units
    • decide on a customer service level
    • use a safety factor table to locate the safety factor for the desired service level
    • multiply the sigma by the safety factor
  123. What is time period safety stock?
    time period safety stock = forecast monthly usage x safety stock time period

    • a time period safety stock allows an even amount of safety stock, equal to the usage, over a designated time frame
    • provides a one month time period of safety stock protecting against the following situations:
    • the end of month review does not indicate reorder
    • the next day available balance goes below the reorder point
  124. What is fixed safety stock?
    • used when a new part is being phased in
    • a part is being phased out

    enables the planning of a safety stock quantity for parts that require special oversight
  125. What are the best approaches to safety stock for Finished goods?
  126. Statistical is effective if demand is large volume and stable
    • time period could be used; result might be a higher safety stock level than necessary
    • fixed could be used; result might be a higher safety stock level than necessary
  127. What are the best approaches to safety stock for Raw materials?
    • statistical is not normally used
    • time period is used with parts with fluctuating demand;safety stock can increase or decrease as demand changes
    • fixed is used when parts requiring special oversigh;parts being phased in or out
  128. A cost accounting system in which costs are assigned to specific jobs
    job costing
  129. The amount of time an item may be held in inventory before it becomes unusable
    Shelf life
  130. A method often associated with the management of inventory risk - manufacturers and retailers that experience high variability in demand for their products can pool together common inventory components.
    risk pooling
  131. A cost system that collects costs historically as they are applied to production and allocates indirect costs to products based on the specific costs and achieved volume of the products
    standard costs
  132. The target costs of an operation, process, or product including direct material, direct labor, and overhead charges
    actual cost system
  133. In general, a quantity of stock planned to be in inventory to protect against fluctuations in demand and supply
    safety stock
  134. Stock designated as in excess of consumption within a defined period or stocks of items that have not been used for a defined period
    inactive inventory
  135. The average of the absolute values of the deviations of observed values from some expected value
    Mean absolute deviation
  136. A lot sizing technique under which the lot size is equal to the net requirements for a given number of periods; for example, weeks into the future
    period order quantity
  137. Inventory items that have met the obsolescence criteria established by the organization
    obsolete inventory
  138. a lot sizing technique in MRP or inventory management that will always cause planned or actual orders to be generated for a predetermined fixed quantity, or multiples thereof, if net requirements for the period exceed the fixed order quantity.
    fixed order quantity
  139. a method of inventory valuation for accounting purposes - the accounting assumption is that the most recently received (last in) is the first to be used or sold (first out) for costing purposes, but there is no necessary relationship with the actual physical movement of specific items.
    Last in first out LIFO
  140. If carrying costs were adjusted upward for all items, with all other parametrs remaining the same, economic order quantities would tend to do which of the following as compared to those for the current period?

    A) to prevent numerous orders for low cost items, which can lead to excessive ordering costs.
    B) increase and remain the same until the carrying cost is revised again
    C) high inventory turns and low days of supply are desirable because they indicate lower levels of inventory relative to sales per period(annual, monthly,and so on)
    D) Finished Goods
    B) increase and remain the same until the carrying cost is revised again
    (this multiple choice question has been scrambled)
  141. Which set of manufacturing objectives is balanced?

    A) Mean absolute deviation
    B) on cycle stock
    C) high customer service, efficient plant operations, and minimum inventory investment
    D) the cost of placing an order, the cost of receiving and handling, and setup costs as applicable for orders placed internally to manufacturing
    C) high customer service, efficient plant operations, and minimum inventory investment
    (this multiple choice question has been scrambled)
  142. What are the objectives of buffer inventories in a lean or TOC environment?

    A) high inventory turns and low days of supply are desirable because they indicate lower levels of inventory relative to sales per period(annual, monthly,and so on)
    B) inventory turns
    C) maintain desired throughput
    D) buffer inventory
    C) maintain desired throughput
    (this multiple choice question has been scrambled)
  143. Which inventory valuation method will cause asset values to most closely resemble current market value during a period of price inflation?

    A) high inventory turns and low days of supply are desirable because they indicate lower levels of inventory relative to sales per period(annual, monthly,and so on)
    B) determine an average monthly usage rate and multiply by 12
    C) FIFO
    D) the cost of placing an order, the cost of receiving and handling, and setup costs as applicable for orders placed internally to manufacturing
    C) FIFO
    (this multiple choice question has been scrambled)
  144. Adding safety lead time when demand is relatively continuous has the same effect as which of the following?

    A) support general operations and maintenance
    B) high customer service, efficient plant operations, and minimum inventory investment
    C) Intermittent (job shop) or batch
    D) increasing the level of inventory
    D) increasing the level of inventory
    (this multiple choice question has been scrambled)
  145. Excess inventories are caused by

    A) Finished Goods
    B) period order quantity
    C) overproducing or buying more than needed
    D) high customer service, efficient plant operations, and minimum inventory investment
    C) overproducing or buying more than needed
    (this multiple choice question has been scrambled)
  146. Refer to the following data for product X:
    50 at $10 each = $500 received on January 11
    200 at $8 each = $1600 received on Feb 6
    250 at $7 each = $1750 received on march 2

    If the company is using the FIFO costing method and 10 units of product X were sold on April 7, the cost per unit for the sale is:

    A) $8
    B) $10
    C) $7.70
    D) $9
    B) $10
    (this multiple choice question has been scrambled)
  147. Manufacturing inventories that typically can be found in both conventional job shop and lean environments are

    A) WIP
    B) high inventory turns and low days of supply are desirable because they indicate lower levels of inventory relative to sales per period(annual, monthly,and so on)
    C) to prevent numerous orders for low cost items, which can lead to excessive ordering costs.
    D) When it is sold.
    A) WIP
    (this multiple choice question has been scrambled)
  148. Which of the following inventory types most likely requires safety stock in a process environment?

    A) increase and remain the same until the carrying cost is revised again
    B) This is an end item that is sold by a company as a completed product.
    C) focus on how a supplier supports its customers' business goals and requirements; it can be subjective
    D) finished goods
    D) finished goods
    (this multiple choice question has been scrambled)
  149. A higher finished goods turns means a

    A) support customer service objectives
    B) smaller risk of obsolescence
    C) Cash to cash cycle
    D) smaller risk of obsolescence
    D) smaller risk of obsolescence
    (this multiple choice question has been scrambled)

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