Chapter 8

Question 1

1) Requiring all packing slips be reconciled to purchase orders before accepting a delivery of inventory would be most likely to prevent which of the following situations?
A. A supplier delivers more inventory than ordered at the end of the year and sends an invoice for the total quantity delivered.
B. An employee mails a fake invoice to the company, which is then paid.
C. The inventory records are incorrectly updated when a receiving department employee enters the wrong product number on the receiving report.
D. Receiving department employees steal inventory and then claim the inventory was received and delivered to the warehouse.

Answer 1

A. A supplier delivers more inventory than ordered at the end of the year and sends an invoice for the total quantity delivered.

Question 2

There is a symmetrical interdependence between a firm’s expenditure cycle and its suppliers’

Answer 2

revenue cycle.

Question 3

Which of the following is not an activity performed in the expenditure cycle?
A) ordering
B) receiving
C) cash disbursement
D) shipping

Answer 3

shipping

Question 4

The first major business activity in the expenditure cycle is

Answer 4

ordering inventory, supplies, or services.

Question 5

The Gwallter Reece Chihuahua Sweater Co. (GRCCo) was established in 2013. It recently signed a large contract with PetCo pet stores. GRCCo will be required to track and forecast sweater sales by linking in to PetCo’s sales database. GRCCo will then be responsible for shipping products to PetCo as needed. The relationship between GRCCo and PetCo is an example of

Answer 5

vendor-managed inventory.

Question 6

The traditional approach to inventory management to ensure sufficient quantity on hand to maintain production is known as

Answer 6

economic order quantity.

Question 7

The ________ specifies the point at which inventory is needed.

Answer 7

reorder point

Question 8

Just-In-Time (JIT) inventory is best characterized by

Answer 8

frequent deliveries of smaller quantities of items to the work centers.

Question 9

Which of the following is least likely to be a major criterion in vendor selection?
A) prices of goods 
B) credit rating of the vendor 
C) quality of goods 
D) ability to deliver on time

Answer 9

credit rating of the vendor

Question 10

Although there are some similarities between JIT and MRP, identify one major difference below.
A) production scheduling
B) reducing the opportunity for inventory theft
C) reducing inventory carrying costs
D) requires more analysis than EOQ

Answer 10

production scheduling