Question 1. The ABC inventory matrix shows an ABC inventory classification based on annual usage on the vertical axis and an ABC inventory classification based on physical inventory on the horizontal axis.

• True
• False

Question 2. Which of the following is considered an advantage/benefit of utilizing an ERP system?

• Fairly inexpensive to purchase and implement
• Enables the company to utilize a single centralized database system, thus eliminating duplicate data entry.
• Flexible enough that it allows different companies with different business models to mold the new ERP system to fit the company's business model
• All of these

Question 3. Organizations practicing lean production often increase their inventory levels in the long-run in order to create a cushion against variability so that they can investigate and eliminate the weaknesses of their system.

• True
• False

Question 4. The ABC inventory control system categorizes inventory items into three groups, A, B, and C. A items are given highest priority, while C items have the lowest priority. Prioritization may be based on annual dollar usage, shelf life, or sales volume.

• True
• False

Question 5. If an item is ordered at its economic order quantity, the annual carrying cost should be:

• slightly less than the annual ordering cost.
• equal to the annual ordering cost.
• twice the annual purchase price.
• the square root of the annual ordering cost.
• cannot be determined because there is insufficient information provided.

Question 6. The true value of CPFR comes from the sophisticated forecasting algorithms that provide companies with highly accurate forecasts, not from the exchange of forecasting information.

• True
• False

Question 7. Which of the following is an engineering document that shows an inclusive listing of all the component parts and assemblies making up the final product?

• Master Production Schedule
• Bill of Materials
• Distribution Requirement Plan
• Resource Requirement Plan

Question 8. Inventory turnover ratio shows how many times a firm turns over its inventory in an accounting period. Faster turnovers are generally viewed as negative because it indicates instability in the firm's inventory level.

• True
• False

Question 9. According to textbook, the top three challenges for CPFR implementation include all of the following except:

• Making organizational and procedural changes
• Trust between supply chain partners
• Cost
• Supplier lead times

Question 10. Which one of the following is not a type of qualitative forecasting?

• Sales force composite
• Consumer survey
• Jury of executive opinion
• Naïve method