Inventory management is a complex process, particularly for larger organizations, but the basics are essentially the same regardless of the organization’s size or type.

In inventory management, goods are delivered into the receiving area of a warehouse in the form of raw materials or components and are put into stock areas or shelves.

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Chapter 12 Inventory Management Quiz

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True or False Quiz Answers

1. According to the global company profile, Amazon.com’s advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations.

• False

2. A major challenge in inventory management is to maintain a balance between inventory investment and customer service.

• True

3. Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.

• False

4. One function of inventory is to take advantage of quantity discounts.

• True

5. Work-in-process inventory is devoted to maintenance, repair, and operations.

• False

6. ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used.

• False

7. In ABC analysis, “A” Items are the most tightly controlled.

• True

8. ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.

• False

9. Cycle counting is an inventory control technique exclusively used for cyclical items.

• False

10. One advantage of cycle counting is that it maintains accurate inventory records.

• True

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