12/12/2020 Quiz 4: WCM - Inventory Management: FINANCIAL MANAGEMENT, PART I

Quiz 4: WCM - Inventory Management

Due Dec 12 at 11:59pm Points 10 Questions 10
Available Nov 23 at 12am - Dec 12 at 11:59pm 20 days Time Limit 120 Minutes

Instructions
All final period pre-tests and quizzes are subject to the following terms:

Deadline / available until: December 12, 2020, 11:59 PM (1 week before the Final Exam) (zero
credit for no submissions)
Answers will show on: December 13, 2020, 12:00 AM (the day after the deadline) (This is so you
can use these pre-tests and quizzes to review for the Final Exam.)
Type: Multiple-choice questions (mix of theory and computation questions)
Attempts: Two attempts for pre-tests (average score will be recorded) and one attempt only for
quizzes
Time limit: one hour for pre-tests and two hours for quizzes
Number of items: 5-10 items for pre-tests and 10-30 items for quizzes

Good luck!

Attempt History
Attempt Time Score
LATEST Attempt 1 25 minutes 5 out of 10

 Correct answers will be available on Dec 13 at 12am.

Score for this quiz: 5 out of 10

Submitted Dec 11 at 1:46pm
This attempt took 25 minutes.

Question 1 1 / 1 pts

At the optimal order quantity size, the:

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12/12/2020 Quiz 4: WCM - Inventory Management: FINANCIAL MANAGEMENT, PART I

the carrying costs equal the restocking costs.

restocking costs are equal to zero.

the total costs equal the carrying costs.

total cost of holding inventory is fully offset by the restocking costs.

Question 2 1 / 1 pts

The amount of inventory that a company would tend to hold in stock

would increase as the

Variability of sales decreases.

Cost of running out of stock decreases.

Cost of carrying inventory decreases.

Sales level falls to a permanently lower level.

Question 3 1 / 1 pts

When a specified level of safety stock is carried for an item in inventory,

the average inventory level for that item

increases by one-half the amount of the safety stock.

decreased by the amount of the safety stock.

is one-half the level of the safety stock.

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12/12/2020 Quiz 4: WCM - Inventory Management: FINANCIAL MANAGEMENT, PART I

increases by the amount of the safety stock.

Question 4 1 / 1 pts

Which of the following statements is most consistent with efficient

inventory management? The firm has a

below-average inventory turnover ratio.

below-average total assets turnover ratio.

relatively high current ratio.

low incidence of production schedule disruptions.

Incorrect Question 5 0 / 1 pts

In the EOQ model, if carrying costs decrease while all other costs remain
unchanged, the number of orders placed would be expected to

decrease.

change without regard to carrying costs.

remain unchanged.

increase.

Incorrect Question 6 0 / 1 pts

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12/12/2020 Quiz 4: WCM - Inventory Management: FINANCIAL MANAGEMENT, PART I

Use the following information for the next two questions.

You are applying for a job at a major door and window retailer. The
manager would like to evaluate your skills in the area of inventory
management and he provides you with the following information:

Annual demand is 450 windows (an average of 9 every week).

Average cost of each window is P250.
Purchase order lead time is 21 days.
Relevant handling costs are P5,000 per year.
Relevant ordering costs are P150 per order.
Shareholders’ expected return is 8%.
Shipments are FOB destination.

What is the economic order quantity (EOQ)?

66

54

72

45

Incorrect
Question 7 0 / 1 pts

What are the total relevant costs, assuming the order size is 75 units and
the relevant carrying costs are P50?

P2,673

P1,775

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12/12/2020 Quiz 4: WCM - Inventory Management: FINANCIAL MANAGEMENT, PART I

P1,500

P2,775

Incorrect
Question 8 0 / 1 pts

Use the following information for the next two questions.

Geron Company manufactures a line of deluxe office fixtures. The annual

demand for its miniature oak file is estimated to be 5,000 units. The
annual cost of carrying one unit in inventory is P10, and the cost to initiate
a production run is P1,000. There are no miniature oak files on hand, and
Geron has scheduled four equal production runs of the miniature oak file
for the coming year, the first of which is to be run immediately. Geron has
250 business days per year. Assume that sales occur uniformly
throughout the year and that production is instantaneous.

If Geron does not maintain a safety stock, the estimated total carrying
costs for the office fixtures for the coming year based on their current
schedule is

P5,000

P10,250

P4,000

P6,250

Question 9 1 / 1 pts

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12/12/2020 Quiz 4: WCM - Inventory Management: FINANCIAL MANAGEMENT, PART I

The number of production runs per year of the miniature oak files that
would minimize the sum of carrying costs and setup costs for the coming
year is

Incorrect
Question 10 0 / 1 pts

The Special Chemical Company uses 150,000 gallons of acid per month.
The cost of carrying the chemical in inventory is P30 per gallon per year,
and the cost of ordering the chemical is P7,500 per order. The firm uses
the chemical at a constant rate throughout the year. It takes 21 days to
receive an order once it is placed. The reorder point is

90,000 gallons.

7,500 gallons.

30,000 gallons.

105,000 gallons.

Quiz Score: 5 out of 10

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