Question Bank BMS II, MATERIALS MANAGEMENT Functions of stores Short Notes 1. Stores location and layout 0 2.

Centralized stores 0 3. Functions of stores 4. Receipt System in Store 0 5. Store records 6. Stock verification 0 7. Materials accounting 0 8. Functions of storage 9. Identification 0 10. Housekeeping 11. ABC analysis 0 12. Optional replenishment 13. Functions of Inventory 14. Sensitivity analysis 15. Materials management as a profit center 16. Value analysis 17. Scrap, obsolete, surplus 0 18. Learning curve 0 19. Make or buy decisions 20. Negotiations 21. Computers in materials management 0 Concept Questions 1. Systems and Procedures ensure variations due to individualities are minimized. 2. Total Cost of Inventory is not sensitive to Economic Order Quantity. 3. Assumptions of classical EOQ model are very unrealistic 4. Maximum stock level is not fixed by organization 5. Concept of EBQ is adequate for mass production 6. Inventory accounts for 80% of working capital in an organization 7. Ordering costs and carrying costs change with order quantity 8. Materials Handling is a highly value adding function of Materials Management. 9. Cost on account of materials is a major component of product cost 10. Materials managements contribution can only be very small in Value Improvement 11. Goal of negotiator is not to extract minimum prize from supplier 12. Right price is always the minimum price 13. 12.Right material is the one that we have been using for a long time 14. Unique number is key to identification system 15. It is common practice to have large number of suppliers for one item in modern management practice 16. Vendor is a member of extended business family of the organization 17. Learning curve is a concept in computer programming 18. Inventory turn over ratio measure the speed in which the stock rolls in an organization

19. Assigning a unique number to an item is a system of identification 20. Value chain is made up of sets of customers and suppliers 21. Standardization leads to variety reduction 22. Same part is known by several names at different locations in an organization. 23. Nowadays decision making is handled by computers entirely at all levels in the hierarchy. 24. Generations of computers represent the technology level 25. demand pattern and lead times constitute uncertainties in the market for a materials manager 26. manufacturing requirement plan is made to meet production schedule 27. Q model of inventory system is ideal for A category items 28. Return On Investment is an indicator of profitability. 29. Main Questions 1. How concept of integrated materials management provides competitive edge to business? 2. What are functions of materials management? Explain briefly. 000 3. What is profit center approach to materials management? How can it improve effectiveness and efficiency of materials management? 4. Why is materials management is an important function of corporate management? 5. Explain what is integrated concept in materials management? 6. Explain merits and demerits of centralization in materials management. 7. What are Purchase Systems? Enumerate purchase systems and explain any two. 8. What is the significance of Vendor Development? Explain a method for vendor rating. 9. What is meant by negotiation? Explain the qualities of purchase manager as a good negotiator. 10. Explain methodology for screening sources for supplies. 11. Briefly explain the objectives and goals of purchasing 000 12. Why stock verification is important? Explain any two methods of stock verification. 000 13. Why do we need accounting systems in Stores? Explain any two accounting systems used in stores. 000 14. What are functions of Stores Management? Explain briefly. 000 15. What are Stores systems? Explain briefly. 000 16. Why codification is necessary? How codes are structured? 17. What is Standardization? Why is it relevant to Stores Management? 18. How stores items become obsolete, surplus or scrap? What are the steps to be taken to minimize these items? 000 19. What is the importance of obsolete, surplus and scrap items? What is the disposal system for these items 20. What is selective Inventory control? Explain how ABC analysis and VED analysis are used for selective Inventory control. 000 21. What is ABC Analysis? What are the benefits and limitations of ABC analysis? 000 22. Establish an expression for Classical EOQ formula explaining the assumptions made. 000

23. What are inventory control systems used for inventory management? Which system is suitable for A category items and why? 24. Annual demand for an item is 2000 units. Ordering cost per order is Rs.20/-, inventory carrying cost is 20% PA., unit price is Rs.10/-. Following offer is received from the supplier. quantity Discount 250 to 499 2% 500 and above 3% What is your decision? If you were to apply P model what would be no of orders per year? 22. [A] Calculate safety stock, reorder level, maximum and minimum level based on following information. Ordering quantity Maximum demand rate Minimum demand rate Maximum lead time Minimum lead time 1000 units 400 units/week 100 units/week 10 weeks 6 weeks

[B] for an item following information is given Requirement 300 units/month Ordering cost Rs.48/- per order Inventory carrying cost 16% PA Price per unit Rs.24/If purchase manager buys this item 4 times in a year, how much extra company has to bear over optimal cost? 23. The demand for a particular items is 18000 units per year. The holding cost is Rs.1.20 per year per unit. Cost of one procurement is Rs. 400/-. No shortages are allowed and the replacement is instantaneous. Determine: a. Optimum order quantity b. Number of orders per year c. Time between orders d. Total cost per year when the cost of one unit is Re.1/25. In a leading biscuit manufacturing firm annual demand for corrugated boxes is 20,000. Cost of placing an order is Rs.100/- and inventory carrying cost is 20%. The price per box is Rs. 10/-. The supplier offers 1% discount if 4000 boxes or more are purchased at a time and 3.5% discount if 10,000 or more are purchased. What should be Economic ordering quantity and would you accept the discount? If so, what discount? (A) Annual requirement of an item is 60,000 units. Ordering costs Rs.30/- per order. Inventory carrying costs 15% per annum. Price per unit is Rs.1.5 per unit. What will be the effect on Total inventory costs if number of orders is reduced to 1/3 of optimal no. of orders? .. [5]

(B) Annual requirement of an item is 10,000 units. Ordering costs Rs.100/- per order. Inventory carrying costs 25% per annum. Price per unit is Rs.8/- per unit. No. of days in a year is 250 days. Lead time is 10 days. Calculate Total Inventory cost at optimal level and reorder level. ..... [5]