1. Additional inventory kept over and above the average amount required to meet demand is called ____ inventory.

a. Seasonal

b. Work-in-process

c. Finished goods

d. Safety stock

2. Based upon your readings of your textbook, backorders ____.

a. result from lost sales b. have little financial impact

c. always creates new setup and holding costs

d. force a customer to purchase elsewhere

e. may occur as a result of an inventory stockout action

3. Based on the information in your textbook, which one of the following statements is the most correct?

a. The level of safety stock maintained decreases when the desired cycle-service level increases.

b. The level of safety stock maintained decreases when the standard deviation of demand during lead time increases.

c.   In a fixed period, inventory system, the value of Q is kept the same from one cycle to another.

d. When demand is uncertain and no safety stock is maintained, stock outs will occur during approximately 50 percent of the cycles.

e.   None of the above are possible.

4. The demand for bread in Ahoma City ranges from 100 to 120 tons per day, every day of the year. The demand is easily satisfied on a daily basis. This demand for bread can be categorized as _____.

a. static demand

b. overfull demand

c. unwholesome demand

d. dynamic demand

5. Which of the following is not a basic function of the Supply Chain Operations Reference (SCOR) model?

a. source

b. make

c. deliver

d. objectify

e. control

6. According to your textbook, which one of the following statements best reflects about conditions associated with vendor-managed inventory (VMI)?

a. VMI is a form of outsourcing.

b. VMI often increases the bullwhip effect.

c. VMI is used only in responsive supply chains.

d. VMI is identical to contract manufacturing.

e. VMI is used to manage WIP inventories under special conditions.

7. Based upon your textbook’s discussion as well as your accounting and finance course work you should have completed to date, when it comes to cash-to-cash conversion cycle, if an online retail store has cost of goods sold equal to $2 million, has 200 operating days in a year, and has a total average on-hand inventory of $500,000, the cost of goods sold per day is _____.

a. $2,500

b. $15,000

c. $7,500

d. $10,000

e. $5,000