#1
What does the acronym SKU stand for in inventory management?
Stock Keeping Unit
ExplanationSKU stands for Stock Keeping Unit in inventory management
#2
Which of the following is not a component of the ABC analysis method for inventory control?
Shortage analysis
ExplanationShortage analysis is not a part of the ABC analysis method for inventory control
#3
What is the primary objective of inventory management?
To minimize the cost of holding inventory
ExplanationThe primary goal of inventory management is minimizing holding costs
#4
Which inventory management technique involves grouping items based on their value and managing each group differently?
ABC analysis
ExplanationABC analysis involves categorizing items by value and managing each category differently
#5
Which of the following inventory management models assumes constant demand and no variability in lead time?
Economic Order Quantity (EOQ)
ExplanationEOQ assumes constant demand and no variability in lead time for optimal inventory management
#6
Which of the following is a method for inventory valuation?
All of the above
ExplanationAll of the provided options (FIFO, LIFO, Weighted Average)
#7
What is the formula for calculating inventory turnover ratio?
Cost of Goods Sold / Average Inventory
ExplanationInventory turnover ratio = Cost of Goods Sold / Average Inventory
#8
Which accounting principle states that inventory should be recorded at the lower of cost or market value?
Conservatism Principle
ExplanationConservatism Principle advocates recording inventory at the lower of cost or market value
#9
In the context of inventory management, what does the term 'Lead Time' refer to?
The time it takes for inventory to be delivered after an order is placed
ExplanationLead Time is the duration between placing an order and receiving the inventory
#10
Which of the following inventory costing methods results in a higher net income during periods of rising prices?
FIFO (First-In, First-Out)
ExplanationFIFO results in higher net income during rising prices as older, lower-cost inventory is sold first
#11
Which inventory costing method assumes that the cost of the latest inventory purchased is the cost of goods sold?
LIFO (Last-In, First-Out)
ExplanationLIFO assumes the latest inventory acquired is the first to be sold, impacting cost of goods sold
#12
What does the Economic Order Quantity (EOQ) represent in inventory management?
The quantity of inventory that minimizes total inventory holding costs and ordering costs
ExplanationEOQ minimizes total inventory costs by balancing holding costs and ordering costs
#13
What is the purpose of safety stock in inventory management?
To prevent stockouts caused by unexpected fluctuations in demand or supply
ExplanationSafety stock prevents stockouts due to unexpected demand or supply changes
#14
What is the impact of carrying a high level of inventory on a company's financial performance?
Decreases liquidity
ExplanationHigh inventory levels decrease liquidity by tying up capital
#15
Which of the following is an advantage of using RFID technology in inventory management?
Can track inventory in real-time
ExplanationRFID technology in inventory management allows real-time tracking of inventory