Inventory Management Learning Block 6 Practice Questions Flashcards

Inventory Performance Measurement and Financial Implications: Learning Block 6 Practice Questions

1
Q

The definition of a hurdle rate is:

A

The minimum rate of return on any new investment

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2
Q

On a company balance sheet, inventory is which of the following?

A

An asset

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3
Q

Transshipment costs are a part of which component of inventory carrying costs?

A

Inventory risk costs

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4
Q

The metric total dollars of on-hand inventory provides an indication of:

A

Investment that a company has tied up in inventory

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5
Q

Which is the least desirable outcome for a return?

A

Throwing away

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6
Q

Inventory carrying costs should be applied to:

A

Raw materials, WIP, and finished goods inventory

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7
Q

Which of the following categories of inventory has the lowest inventory carrying cost?

A

Raw materials

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8
Q

Days on hand refers to the amount of inventory that, if a company reaches zero days on hand, the company will:

A

Run out of product

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9
Q

Taxes and insurance are a part of which inventory carrying cost component?

A

Inventory service cost

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10
Q

An example of shrinkage in inventory risk cost is:

A

Stolen product or evaporated liquid product

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