Reference no: EM132541127

Question 1: Which of the following statements is false?

a)For some types of business the level of inventory held may vary substantially over the year due to the seasonal nature of the industry.

b)Lower inventory levels will result in lower overall costs.

c)A business that holds inventory simply to meet the day-to-day requirements of its customers and production normally tries to minimise its inventory level.

d)Inventory is commonly held to meet the immediate day-to-day requirements of customers and production.

Question 2: Inventory management techniques include which of the following?

a)Periodic checking of inventory levels for reordering point determination and use of EOQ models

b)All of the choices are inventory management techniques.

c)JIT inventory management

d)Statistical analysis for sales demand forecasting and monitoring of inventory turnover ratio

Question 3: All of the following are limitations of EOQ method of inventory management, except:-

a)The EOQ method assumes stable demand.

b)Discounts for bulk purchases are not taken into account.

c)Calculation of a precise order quantity is time consuming.

d)The EOQ method assumes that product demand can be accurately predicted.

Question 4: An effective just-in-time inventory system:-

a)may require changes in work process and work flow.

b)requires a company to hold a large supply of inventory so they can be prepared for any incoming order.

c)may require a company to utilise many suppliers to get the lowest costs.

d)allows for inefficiency in the production process.

Question 5: The ABC method of analysing and controlling inventory:-

a)is a method in which a company list all of its inventory items alphabetically.

b)isn't an effective method to help management prioritise their efforts in inventory control.

c)is a method in which inventory is divided into categories based upon its value.

d)is a method that comes from activity-based management.

Question 6: Which of the following is not a policy that a business should establish when providing credit to its customers?

a)How much time should be allowed before payment is required

b)How the risk of non-payment can be increased

c)Which customers should receive credit and how much credit should be offered

d)Whether discounts will be offered for prompt payment

Question 7: A business needs to gather information on customer likelihood of payment. Which of the following would not be a good source of information that it might choose to help assess a company's financial health?

a)Financial statements

b)Trade and bank references

c)Credit agencies

d)Australian Stock Exchange

Question 8: Which of the following policies might be unlikely to ensure that credit sales amounts are collected as quickly as possible?

a)Monitor outstanding debts with an ageing schedule.

b)Make credit terms clear.

c)Issue invoices promptly.

d)Respond to customer queries and complaints on a limited scope.

Question 9: If a firm wishes to increase market share, it might

a)charge interest on customers' outstanding balances.

b)allow credit customers longer to pay their bills.

c)institute a cash only policy and stop credit sales.

d)shorten its credit period for credit customers.

Question 10: In deciding whether or not to offer early settlement to customers, a business should not:-

a)determine their response if a customer pays slowly, but still takes the discount.

b)consider whether or not the discount will reduce bad debt.

c)consider the trade references of individual customers.

d)consider whether the size of the discount will encourage prompt payment.