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Free download in PDF Inventory Management Multiple Choice Questions and Answers for competitive exams. These short objective type questions with answers are very important for Board exams as well as competitive exams. These short solved questions or quizzes are provided by Gkseries.
(1)
Which of the following is not an inventory?
[A]
Machines
[B]
Raw material
[C]
Finished products
[D]
Consumable tools
(2)
The cost of insurance and taxes are included in
[A]
Cost of ordering
[B]
Set up cost
[C]
Inventory carrying cost
[D]
Cost of shortages
Answer: Inventory carrying cost
(3)
The minimum stock level is calculated as
[A]
Reorder level – (Nornal consumption x Normal delivery time)
[B]
Reorder level + (Nornal consumption x Normal delivery time)
[C]
(Reorder level + Nornal consumption) x Normal delivery time
[D]
(Reorder level + Nornal consumption) / Normal delivery time
Answer: Reorder level – (Nornal consumption x Normal delivery time)
(4)
The time period between placing an order its receipt in stock is known as
[A]
Lead time
[B]
Carrying time
[C]
Shortage time
[D]
Over time
(5)
Re-ordering level is calculated as
[A]
Maximum consumption rate x Maximum re-order period
[B]
Minimum consumption rate x Minimum re-order period
[C]
Maximum consumption rate x Minimum re-order period
[D]
Minimum consumption rate x Maximum re-order period
Answer: Maximum consumption rate x Maximum re-order period
(6)
The Economic Order Quantity (EOQ) is calculated as
[A]
(2D*S/h)^1/2
[B]
(DS*/h)^1/2
[C]
(D*S/2h)^1/2
[D]
All of the above
(7)
If demand in units is 18000, relevant ordering cost for each year is $150 and an order quantity is 1500 then annual relevant ordering cost would be
[A]
$200
[B]
$190
[C]
$160
[D]
$180
(8)
Profit forgone by capital investment in inventory rather than investment of capital to somewhere else is classified as
[A]
relevant purchase order costs
[B]
relevant inventory carrying costs
[C]
irrelevant inventory carrying costs
[D]
relevant opportunity cost of capital
Answer: relevant opportunity cost of capital
(9)
Costing system which omits some of journal entries in accounting system is known as
[A]
ain-time costing
[B]
trigger costing
[C]
back flush costing
[D]
lead time costing
Answer: back flush costing
(10)
If required rate of return is 12% and per unit cost of units purchased is $35 then relevant opportunity cost of capital will be
[A]
$6.20
[B]
$7.20
[C]
$4.20
[D]
$5.20
(11)
If purchase order lead time is 35 minutes and number of units sold per time is 400 units then reorder point will be
[A]
14000 units
[B]
14500 units
[C]
15000 units
[D]
15500 units
(12)
If demand of one year is 25000 units, relevant ordering cost for each purchase order is $210 and carrying cost of one unit of stock is $25 then economic order quantity is
[A]
678 packages
[B]
648 packages
[C]
658 packages
[D]
668 packages
(13)
Which of the following is true for Inventory control?
[A]
Economic order quantity has minimum total cost per order
[B]
Inventory carrying costs increases with quantity per order
[C]
Ordering cost decreases with lo size
[D]
All of the above
(14)
Re-ordering level is calculated as
[A]
Maximum consumption rate x Maximum re-order period
[B]
Minimum consumption rate x Minimum re-order period
[C]
Maximum consumption rate x Minimum re-order period
[D]
Minimum consumption rate x Maximum re-order period
Answer: Maximum consumption rate x Maximum re-order period
(15)
Average stock level can be calculated as
[A]
Minimum stock level + ½ of Re-order level
[B]
Maximum stock level + ½ of Re-order level
[C]
Minimum stock level + 1/3 of Re-order level
[D]
Maximum stock level + 1/3 of Re-order level
Answer: Minimum stock level + ½ of Re-order level
(16)
The time period between placing an order its receipt in stock is known as
[A]
Lead time
[B]
Carrying time
[C]
Shortage time
[D]
Over time
(17)
Activities related to coordinating, controlling and planning activities of flow of inventory are classified as
[A]
decisional management
[B]
throughput management
[C]
inventory management
[D]
manufacturing management
Answer: inventory management
(18)
Cost of product failure, error prevention and appraisals are classified as
[A]
stocking costs
[B]
stock-out costs
[C]
costs of quality
[D]
None of the above
(19)
An example of purchasing costs include
[A]
incoming freight
[B]
storage costs
[C]
insurance
[D]
spoilage
(20)
If an average inventory is 2000 units and annual relevant carrying cost of each unit is $5 then annual relevant carrying cost will be
[A]
$5,000
[B]
$4,500
[C]
$5,500
[D]
$6,000
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