Supply Chain and Logistics Inventory Management 2

Question 1

What is a reorder point (ROP)?

Accepted Answer

The inventory level at which a new order should be placed

Answer

The maximum inventory level allowed

Answer

The quantity of goods returned per cycle

Answer

The minimum safety stock threshold

Question 2

Which inventory system continuously tracks stock levels and triggers orders when needed?

Accepted Answer

Continuous review system

Answer

Periodic review system

Answer

Vendor-managed inventory

Answer

Just-in-time system

Question 3

What is the carrying cost of inventory?

Accepted Answer

Total cost of holding inventory over a period

Answer

Cost to ship goods to customers

Answer

Purchase price of raw materials

Answer

Cost to process a purchase order

Question 4

Which approach keeps inventory levels extremely low by receiving goods only as they are needed?

Accepted Answer

Just-in-Time (JIT)

Answer

Economic Order Quantity

Answer

Vendor-Managed Inventory

Answer

Cross-docking

Question 5

What does the term 'shrinkage' refer to in retail inventory?

Accepted Answer

Inventory loss due to theft, damage, or administrative error

Answer

Seasonal decline in sales

Answer

Product size reduction

Answer

Decrease in supplier lead time

Question 6

In a two-bin inventory system, what triggers a new order?

Accepted Answer

When the second bin starts being used

Answer

When both bins are full

Answer

When the first bin is empty

Answer

When weekly count reveals shortage