Inventory Management Quiz: Test Your Knowledge

Question 1

Which of the following is **not** a benefit of effective inventory management?

Accepted Answer

Increased lead times

Answer

Reduced holding costs

Answer

Improved customer service

Answer

Increased production efficiency

Question 2

The ABC classification method categorizes items based on their:

Accepted Answer

Value and demand

Answer

Size and weight

Answer

Lead time and storage costs

Answer

Availability and shelf life

Question 3

Which forecasting technique is most appropriate for items with relatively stable demand?

Accepted Answer

Moving average

Answer

Exponential smoothing

Answer

Linear regression

Answer

ARIMA

Question 4

The safety stock level is determined by considering:

Accepted Answer

Expected demand during lead time and service level

Answer

Inventory holding costs and ordering costs

Answer

Production capacity and raw material availability

Answer

Storage space and transportation costs

Question 5

The economic order quantity (EOQ) is the:

Accepted Answer

Optimal quantity to order that minimizes total inventory costs

Answer

Maximum quantity that can be stored in a given space

Answer

Minimum quantity that must be ordered to avoid stockouts

Answer

Quantity that is ordered at the lowest possible price

Question 6

Which inventory management practice aligns best with ethical and sustainable principles?

Accepted Answer

Minimizing waste and returns

Answer

Prioritizing first-in, first-out (FIFO) accounting

Answer

Maintaining high inventory levels to prevent stockouts

Answer

Disposing of obsolete inventory in landfills

Question 7

Which of the following is not a benefit of effective inventory management?

Accepted Answer

Increased employee morale

Answer

Reduced carrying costs

Answer

Improved customer satisfaction

Answer

Enhanced cash flow

Question 8

Which inventory classification method classifies items based on their annual usage value?

Accepted Answer

ABC analysis

Answer

VED analysis

Answer

FSN analysis

Answer

XYZ analysis

Question 9

What is the primary purpose of a reorder point?

Accepted Answer

To prevent stockouts

Answer

To minimize inventory levels

Answer

To maximize inventory turnover

Answer

To determine the optimal order quantity

Question 10

Which forecasting technique is most suitable for products with a stable demand pattern?

Accepted Answer

Moving average

Answer

Exponential smoothing

Answer

Linear regression

Answer

ARIMA

Question 11

What is the main advantage of using a safety stock in inventory management?

Accepted Answer

It reduces the risk of stockouts

Answer

It lowers inventory carrying costs

Answer

It simplifies inventory forecasting

Answer

It eliminates the need for reorder points

Question 12

What is the primary purpose of a perpetual inventory system?

Accepted Answer

To track inventory levels in real-time

Answer

To update inventory records only at the end of accounting periods

Answer

To estimate inventory levels based on past transactions

Answer

To determine the cost of goods sold based on periodic physical counts

Question 13

What is the main goal of inventory cycle counting?

Accepted Answer

To confirm the accuracy of inventory records

Answer

To calculate the value of inventory on hand

Answer

To identify obsolete or damaged inventory

Answer

To optimize inventory levels

Question 14

Which of the following is NOT a common inventory classification method?

Accepted Answer

SWOT analysis

Answer

VED analysis

Answer

ABC analysis

Answer

XYZ analysis

Question 15

What is the primary purpose of forecasting techniques in inventory management?

Accepted Answer

To predict future demand patterns

Answer

To minimize inventory levels

Answer

To increase customer satisfaction

Answer

To improve cash flow

Question 16

What is the main goal of the economic order quantity (EOQ) model?

Accepted Answer

To determine the optimal order quantity that minimizes total inventory costs

Answer

Forecasting future demand

Answer

Reducing lead times

Answer

Setting safety stock levels

Question 17

What is the primary function of safety stock in inventory management?

Accepted Answer

To act as a buffer against unexpected fluctuations in demand

Answer

To reduce lead times

Answer

To ensure there is always enough inventory on hand

Answer

To increase customer satisfaction

Question 18

Which inventory valuation method is commonly used for managing perishable goods?

Accepted Answer

First-in, first-out (FIFO)

Answer

Specific identification

Answer

Last-in, first-out (LIFO)

Answer

Weighted average cost

Question 19

What is the primary goal of Materials Requirements Planning (MRP) in inventory management?

Accepted Answer

To ensure that raw materials are available for production.

Answer

To reduce inventory storage costs.

Answer

To improve customer satisfaction by minimizing delays.

Question 20

When historical data is unavailable or unreliable, which forecasting technique is typically employed?

Accepted Answer

Expert judgment

Answer

Exponential smoothing

Answer

Moving average

Answer

Regression analysis

Question 21

What is a core objective of effective inventory control?

Accepted Answer

Minimizing inventory holding costs

Answer

Ensuring product quality

Answer

Preventing product obsolescence

Answer

Forecasting demand

Question 22

Which inventory control system relies on periodic inventory counts to update records?

Accepted Answer

Periodic inventory system

Answer

Just-in-time system

Answer

Perpetual inventory system

Answer

Consignment inventory system

Question 23

What is the key difference between economic order quantity (EOQ) and reorder point?

Accepted Answer

EOQ determines the optimal order quantity to minimize inventory costs, while the reorder point indicates the inventory level at which a new order should be placed to prevent stockouts.

Answer

EOQ is the minimum quantity that can be ordered, while reorder point is the maximum quantity that can be ordered.

Question 24

What is the role of technology in inventory management?

Accepted Answer

To automate inventory processes and improve data accuracy

Answer

To replace human employees with robots

Answer

To increase inventory carrying costs