IDAT Administration and Logistics 2 — Questions and Answers
Question 1: Which inventory management method assumes the most recently purchased items are sold first?
- FIFO
- LIFO (Correct answer)
- Weighted Average
- Specific Identification
Correct answer: LIFO
LIFO (Last In, First Out) assumes the most recently acquired inventory items are sold or used first.
Question 2: A purchase order (PO) primarily serves to:
- Record payment to a vendor
- Authorize a buyer's intent to purchase goods or services (Correct answer)
- Confirm receipt of delivered goods
- Initiate a supplier's invoice
Correct answer: Authorize a buyer's intent to purchase goods or services
A purchase order is a formal document sent by a buyer to a supplier authorizing a specific purchase.
Question 3: The term 'lead time' in logistics refers to:
- The time a manager spends planning a project
- The delay between order placement and order receipt (Correct answer)
- The duration of a supplier contract
- The number of days inventory sits in a warehouse
Correct answer: The delay between order placement and order receipt
Lead time is the elapsed time from when an order is placed to when it is received and ready for use.
Question 4: Which document confirms that goods received match what was ordered in quantity and condition?
- Invoice
- Bill of lading
- Receiving report (Correct answer)
- Packing slip
Correct answer: Receiving report
A receiving report documents that delivered goods have been inspected and verified against the purchase order.
Question 5: In supply chain management, a 'bottleneck' is best described as:
- A stage that limits the overall throughput of the system (Correct answer)
- A surplus of inventory at a distribution center
- A contract dispute with a vendor
- A transport route with high fuel costs
Correct answer: A stage that limits the overall throughput of the system
A bottleneck is the slowest step in a process that constrains the capacity and speed of the entire system.
Question 6: Which of the following best defines 'safety stock'?
- Inventory reserved for high-priority customers only
- Extra inventory kept to buffer against demand or supply uncertainty (Correct answer)
- Stock that has passed its expiration date
- Items held pending quality inspection
Correct answer: Extra inventory kept to buffer against demand or supply uncertainty
Safety stock is additional inventory maintained to reduce the risk of stockouts caused by demand fluctuations or supply delays.
Question 7: An organization uses a 'just-in-time' (JIT) inventory system. What is the primary goal?
- Maximize warehouse storage capacity
- Receive goods only as they are needed in the production process (Correct answer)
- Build large safety stock reserves
- Negotiate bulk discounts with suppliers
Correct answer: Receive goods only as they are needed in the production process
JIT aims to minimize inventory holding costs by receiving materials precisely when they are needed for production.
IDAT Administration and Logistics 2
Which inventory management method assumes the most recently purchased items are sold first?