Lesson 3 - Inventory Controls

Question 1

A method or approach for monitoring an organization’s inventory
levels and making sure the proper quantity or amount of goods is
on hand when needed.

Answer 1

Inventory Controls

Question 2

Classification of Inventories

Answer 2

• Raw Materials
• Work-in-Process (WIP)
• Finished goods
• Maintenance, repair, and overhaul (MRO)

Question 3

A principle of producing goods or delivering services precisely
when they are needed, neither too early nor too late.

Answer 3

Just-In-Time (JIT)

Question 4

A method used to determine the optimal order quantity that
minimize total inventory costs

Answer 4

Economic Order Quantity (EOQ)

Question 5

Used in inventory management & resource allocation to
categorize items based on their importance, price & sales
volume.

Answer 5

ABC Analysis

Question 6

expensive, high-class items with tight controls and small inventories

Answer 6

A class

Question 7

average-priced, mid-priority items with medium sales volume and stocks

Answer 7

B class

Question 8

low-value, low-cost items with high sales and huge inventories

Answer 8

C class

Question 9

Also known as manual control
system,pertains to a recurring
count of goods at specific
intervals

Answer 9

Periodic Inventory Control System

Question 10

Provides an accurate count of
inventory levels in real-time. It
utilizes technology such as
barcodes and radio frequency
identification (RFID).

Answer 10

Perpetual Inventory Control Systems

Question 11

It is a principle used to determine the cost of
goods sold (COGS). An assumption that the
earliest inventory acquired is the first to be sold,
newer inventory stocks left behind.

Answer 11

First-In-First-Out (FIFO)

Question 12

It is also a principle used to determine the cost of
goods sold (COGS) and the value of ending
inventory. An assumption that the most
recequently acquired or produced inventory is
the first to be sold or used.

Answer 12

Last-In-First-Out (LIFO)

Question 13

• It is used to calculate the average cost of inventory by
  considering both the cost and the quantity of goods
  available for sale during a specific accounting period.
• An assumption that all units of inventory are
  interchangeable and valued equally, regardless of
  when they were acquired or individual costs.

Answer 13

Weighted Average

Question 14

It measures how efficiently a company manages
its inventory by showing how many times it sells
and replaces its inventory over a period.

Answer 14

Inventory turnover ratio

Question 15

It measures how efficiently a company manages
its inventory by showing how many times it sells
and replaces its inventory over a period.

Answer 15

Inventory turnover ratio

Question 16

measures the efficiency of a company’s sales
operations by indicating the average number of
days it takes to sell off inventory.

Answer 16

Days sales of inventory

Question 17

It is often referred to as order fulfillment rate,
serves as a crucial indicator of a company’s
operational efficiency in e-commerce.

Answer 17

Fill rate

Question 18

situation wherein a business exhausts its
supply of a particular product, rendering it
unavailable for purchase by customers.

Answer 18

Stockouts

Question 19

It occurs when a business purchases an excess of inventory
beyond what it can effectively sell within a reasonable timeframe, resulting in surplus stock in storage facilities.

Answer 19

Overstocking

Question 20

It is also known as “excess” or “dead” inventory, refers to
stock deemed unsellable due to lack of demand, typically occurring as products reach the end of their useful life.

Answer 20

Obsolescence