Financial Management for Project Managers Inventory Management 5

Question 1

Which inventory management technique uses demand forecasts and bill-of-materials data to calculate future inventory requirements for manufacturing projects?

Accepted Answer

Material Requirements Planning (MRP)

Answer

MRP uses the master production schedule, bill of materials, and current inventory records to plan when and how much material to order.

Question 2

A project manager implements Vendor-Managed Inventory (VMI). Which party is responsible for determining replenishment quantities and timing under this arrangement?

Accepted Answer

The supplier

Answer

In VMI, the supplier monitors the buyer's inventory levels and takes responsibility for replenishment decisions, reducing the buyer's ordering burden.

Question 3

Which of the following costs is considered a 'stockout cost' in inventory management?

Accepted Answer

Lost sales due to unavailable products

Answer

Stockout costs include lost sales, emergency procurement premiums, expediting fees, and damage to customer relationships caused by inventory shortages.

Question 4

A project manager is evaluating a supplier offering a 3% discount for orders exceeding 1,000 units (current EOQ is 400 units). Which analysis framework should guide this decision?

Accepted Answer

Quantity discount model

Answer

The quantity discount model compares total costs (purchase price + ordering + holding) at different order quantities to determine if the discount justifies the larger order.

Question 5

A project experiences 'inventory shrinkage.' Which of the following is NOT a typical cause of shrinkage?

Accepted Answer

Increasing safety stock levels

Answer

Shrinkage refers to unexplained inventory losses from theft, damage, or errors; intentionally increasing safety stock is a management decision, not a source of shrinkage.

Financial Management for Project Managers Practice Test

Financial Management for Project Managers Practice Test

Financial Management for Project Managers Inventory Management 5