#1
Which of the following is an inventory costing method?
FIFO (First In, First Out)
LEGO (Last Expired, Gone Out)
POPS (Proportional Outflow Per Sale)
MILO (Most In, Last Out)
#2
What is the primary objective of inventory management?
To minimize costs while maintaining adequate inventory levels
To maximize costs and inventory levels
To minimize customer satisfaction
To minimize sales revenue
#3
What does the term 'Lead Time' refer to in inventory management?
The time it takes for an order to be delivered after it is placed
The time it takes for inventory to be sold
The time it takes for inventory to be manufactured
The time it takes for inventory to expire
#4
What does the term 'Inventory Turnover Ratio' measure?
The efficiency of inventory management in selling inventory
The profitability of inventory
The speed at which inventory is sold and replaced
The value of inventory on hand
#5
What does the Economic Order Quantity (EOQ) formula help determine?
Optimal level of inventory to order
Total cost of inventory
Sales forecast
Employee efficiency
#6
What is the purpose of the ABC analysis in inventory management?
To classify inventory items based on their importance
To calculate total inventory value
To track inventory movements
To determine reorder points
#7
Which inventory valuation method assumes that the most recently purchased or produced items are sold first?
LIFO (Last In, First Out)
FIFO (First In, First Out)
Weighted Average Cost
Specific Identification
#8
What is the purpose of a safety stock?
To ensure sufficient inventory in case of unexpected demand or supply chain disruptions
To reduce costs by keeping inventory levels low
To increase lead time
To maximize profit
#9
What is the formula to calculate Days' Sales of Inventory (DSI) or Days' Inventory?
365 / Inventory Turnover Ratio
Inventory Turnover Ratio / 365
365 * Inventory Turnover Ratio
Inventory Turnover Ratio * 365
#10
What is the difference between perpetual inventory system and periodic inventory system?
Perpetual system records inventory balances continuously, while periodic system counts inventory periodically
Perpetual system counts inventory periodically, while periodic system records inventory balances continuously
There is no difference between the two systems
Perpetual system is used in retail, while periodic system is used in manufacturing
#11
Which of the following inventory valuation methods assumes that all units of inventory are indistinguishable?
FIFO (First In, First Out)
Specific Identification
Weighted Average Cost
LIFO (Last In, First Out)
#12
What is the formula to calculate Inventory Turnover Ratio?
Cost of Goods Sold / Average Inventory
Average Inventory / Cost of Goods Sold
Sales / Average Inventory
Average Inventory / Sales
#13
In Activity-Based Costing (ABC), what does the 'activity cost pool' refer to?
Total costs associated with a particular activity
The cost of inventory storage
The cost of inventory procurement
The cost of goods sold
#14
Which inventory costing method is often used in industries where the exact cost of items can be easily identified?
FIFO (First In, First Out)
LIFO (Last In, First Out)
Specific Identification
Weighted Average Cost
#15
What does the term 'Inventory Shrinkage' refer to in inventory management?
Loss of inventory due to theft, damage, or error
Increase in inventory levels
Efficient inventory tracking
Increased sales revenue
#16
Which of the following costs is considered when calculating the carrying cost of inventory?
Storage costs
Purchase price
Sales revenue
Production costs
#17
What does the term 'Just-In-Time (JIT)' inventory management refer to?
A system of inventory management aimed at reducing waste and increasing efficiency by receiving goods only as they are needed in the production process
Maintaining excess inventory to ensure uninterrupted production
Ordering large quantities of inventory to take advantage of bulk discounts
Storing inventory in multiple warehouses to reduce transportation costs
#18
What is the significance of the Economic Production Quantity (EPQ) model in inventory management?
Determines the optimal production quantity to minimize total inventory costs
Calculates the reorder point for inventory replenishment
Determines the optimal ordering quantity to minimize total inventory costs
Calculates the safety stock level for inventory management