IGNITE ACADEMY

Subject:
Material Management MCQ

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1. Buffer stock means (2014)
(1) Maximum stock level (2) Minimum stock level
(3) Re-order level (4) Average stock level

2. The stock level between maximum and minimum stock level is (2014)
(1) Re-order level (2) Average stock level
(3) Danger level (4) Economic order quantity

3. Office and classroom furniture is recorded in (2014)

(1) Deadstock register (2) Consumable stock register
(3) Semi-consumable stock register (4) Store inventory stock register
Sol.
Deadstock register: This register typically contains items that are no longer in use or have become obsolete.
Office or classroom furniture that is no longer functional or needed might be recorded here.
2. Consumable stock register: This register contains items that are consumed or used up over time, such as
stationery, paper, ink cartridges, etc. Furniture wouldn't typically be recorded here unless it's considered
consumable in some way (e.g., disposable chairs or tables).
3. Semi-consumable stock register: This register may contain items that are partially consumed or depleted
over time but not completely used up in one go. For example, furniture parts or accessories might be recorded
here if they need periodic replacement or maintenance.
4. Store inventory stock register: This register encompasses all inventory items stored in a particular
location, such as an office supply room or warehouse. Office and classroom furniture that's still in use and
held in stock for future use would likely be recorded here.
5. Loan Register: Sometimes non-consumable material is issued from store on loan for temporary period by
the production of slip of authority. Before issuing, material is entered in this register and signature of the
bearer is taken in this register and slip of authority is kept safe. When the material comes back, slip is returned
and entry of material received back is made in loan register.

4. In ABC Analysis, if A category material is less than 10 percent of the total consumption, then
the total inventory cost will be (2014)
(1) 70 to 80% (2) 40 to 60% (3) 15 to 25% (4) Less than 10%

5. Bin Card is used in a store to (2014)

(1) Maintain store accounts (2) Record quantity
(3) Record quantity and value (4) Post quantity periodically
Sol :

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6. Machine Maintenance Record is maintained in : (2016)
(1) Dead Stock Register (2) Inventory book
(3) History sheet (4) Bin-card
Sol : History sheet: This term accurately reflects the purpose of a document that captures the history of a
machine, including its maintenance activities, repairs, service dates, and other relevant information.

7. Which of the following in ABC Analysis is an 'A item’? (2016)

(1) 70% of the total inventory cost is against 10% of the total items.
(2) 10% of the total inventory cost is against 10% of the total items.
(3) 70% of the total inventory cost is against 70% of the total items.
(4) 10% of the total inventory cost is against 70% of the total items.

8. Which of the following is the correct answer ? (2016)

(1) Reorder level = Average consumption during total lead time - safety stock
(2) Reorder level = Total stock
(3) Reorder level = Obsolete stock
(4) Reorder level = Average consumption during total lead time + safety stock

9. What do you mean by buffer stock in managing of stores? (2016)

(1) Reorder level stock
(2) Reserve or margin of safety stock to be used in case of emergency
(3) Lead or procurement time
(4) Average stock to place a order

10. The instructor keeps the records of Tools and Equipment under his change in : (2016)
(1) Dead Stock Register (2) Consumable Register
(3) Tool Gibs Register (4) Inventory Register

11. Economic Order Quantity (EOQ) is meaningful for which of the following ? (2016)
(1) Static parts (2) Dynamic parts
(3) Fast moving parts (4) Slow moving parts

12. Materials management mainly focuses on ____ .

(1) Management of raw material or components required for continuous production
(2) Production of finished goods and it’s sale in the appropriate market
(c) Management of logistics and supply chain activities for timely market reach
(d) Distribution of materials to the seller and distributor for smooth functioning of the market
activities.

13. Machine Maintenance Record is maintained in :

(1) Dead Stock Register (2) Inventory book
(3) History sheet (4) Bin-card

14. Inventory control is most closely related to

(1) Quality control (2) Quality management
(3) Machining control (4) Materials management

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15. Raw Materials and WIP can be classified under ___
(1) Indirect Material (2) Direct Material
(3) Finished Material (4) Standard Parts
Sol.
• Direct materials are those materials that are directly used in the production process to manufacture a product.
Raw materials are the basic materials used in manufacturing, while work-in-progress (WIP) refers to partially
completed goods in various stages of the production process. Both raw materials and WIP are directly involved
in the production process and contribute to the final product, making them examples of direct materials
• Indirect materials are items that are used in the production process but are not directly incorporated into the
final product. Instead, they are used to support the production process or facilitate operations within a company.
These items do not become part of the finished product and are often classified as overhead costs rather than
direct production costs.

16. _____ are the basic materials which have no undergone any conversion since their receipt from suppliers.
(1) WIP (2) Raw Material (3) Finished Parts (4) Work Made Parts

17. Fixed quantity systems are also termed as inventory control.systems of

(1) Q (2) p (3) qv (4) Pq

18. Inventory control and quality is involved in which of the following phases of production planning and
control
(1) Pre-planning stage (2) Monitoring stage (3) Planning stage (4) Action stage

19. Buying according to the requirements is called _____ .

(1) Seasonal Buying (2) Hand to mouth buying
(3) Scheduled Buying (4) Tender Buying

20. Which is not a part of 5R’s of buying?

(1) Right Quality (2) Right Quantity (3) Right Source (4) None of the above

21. In Materials Requirement Planning, if the inventory holding cost is very high and the setup cost is zero,
which one of the following lot- sizing approaches should be used?
(1) Economic Order Quantity (2) Lot-for-Lot
(3) Base Stock Level (4) Fixed Period Quantity, for 2 periods

22. _____ also called part lists or building lists is the document generated at the design stage.
(1) MRP (Material Requirement Planning) (2) BOM (Bill of Materials)
(3) MPS (Master Production Schedule) (4) None of the above

23. Purchasing responsibilities can be divided int Buying, Clerical and ________ division.
(1) Packing (2) Traffic (3) Record (4) Follow up

24. Materials Management has an important role in ______ management.

(1) Production (2) Supply chain (3) Operations (4) All of the above

25. The first activity of Purchasing cycle is __ .

(1) Communicating requirement to the purchase (2) Source Selection and development
(3) Recognizing the need for procurement (4) Inspection of goods

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26. ___ is the time that elapses between issuing replenishment order and receiving the material in stores.
(1) Replenishment time (2) Lead time (3) Idle-time (4) None of the above

27. _____ is the scientific technique for planning the ordering and usage of materials at various levels of
production and for monitoring the stocks during these transactions.
(1) MPS (2) MRP (3) BOM (4) None of the above

28. Generally, the bill of material does not consist of

(1) Part number (2) Price of the part (3) Name of the part (4) Specifications of part

Sol.:

29. _____ is the task of buying goods of the right quality, in the right quantities, at the right time and at the right
price.
(1) Supplying (2) Purchasing (3) Scrutinizing (4) None of the above

30. In ABC classification system of inventory management, group items have low level of safety stock.
(1) A (2) B (3) C (4) Any of these

31. Procuring an item in staggering deliveries according to the delivery schedule finished to the supplier by the
buyer.
(1) Seasonal Buying (2) Hand to mouth buying
(3) Scheduled Buying (4) Tender Buying

32. All major inputs to the MRP system include:

(1) Master production schedule, inventory records, and bills of material
(2) Master production schedule and bill of material
(3) Bill of material and inventory records
(4) Inventory records and master production schedule

33. Buying of the annual requirements of an item during its season is called ____ .
(1) Seasonal Buying (2) Hand to mouth buying
(3) Scheduled Buying (4) Speculative Buying

34. ______ is the capability of manufacturing to produce goods and services.

(1) Control (2) Priority (3) Capacity (4) Planning

35. ------- is the systematic use of techniques that identify a required function, establish a value for
that function, and finally provide the function at the lowest overall cost.

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 (1) Functional analysis (2) Value analysis
(3) Functional specifications (4) None of the above

36. ------ is the process of multiplying the requirements by the usage quantity and recording the appropriate
requirements throughout the product tree.
(1) Exploding (2) Offsetting (3) Planning orders (4) Lead time

37. To get the most profit, a company should________

(1) Provide the lowest inventory investment (2) Provide the highest distribution costs
(3) Provide high production costs (4) Provide little customer service

38. In the------- environment, many different end items are made from a small number of components.
(1) Make-to-order (2) Make-to-stock (3) Assembly-to-order (4) Engineer-to-order

39. ______ & direct material are costs that increase or decrease with the quantity sold.
(1) Indirect labor (2) Direct labor (3) Indirect material (4) Labor

40. The available capacity can be increased by ____ .

(1) Limiting subcontracting (2) Using fewer workers
(3) Rerouting away from other work centers (4) Scheduling overtime

41. --------include hand tools, spare parts, lubricants, and cleaning supplies.
(1) MRO supplies (2) Raw materials (3) Work-in-process (4) Finished goods

42. -----------inventory is held to cover random unpredictable changes in supply and demand or lead time.
(1) Fluctuation (2) Anticipation (3) Transportation (4) Lot-size

43. To achieve ___ in purchasing and transportation, goods may be purchased in larger quantities than
the actual demand.
(1) Continuation (2) Quality (3) Cost efficiency (4) Potential value

44. Which of the following models is used to calculate the timing of the inventory order ?
(1) Economic order quantity model (2) Fixed order quantity model
(3) Reorder point model (4) Fixed order inventory model

45. As the volume of inventory increases, the following cost will increase
(1) Stockout cost (2) Ordering cost (3) Procuring cost (4) Inventory carrying cost

46. A long-term solvency or leverage ratio is called ___.

(1) Net profit ratio (2) Proprietary ratio (3) Activity ratio (4) Stock turnover ratio

47. The rent for the stores where materials are stored falls under
(1) Inventory-carrying cost (2) Ordering cost
(3) Procurement cost (4) Stocking cost

48. The basis for ABC analysis is

(1) Interests of Materials manager (2) Interests of the top management
(3) Pareto's 80-20 rule (4) None of these
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49. ABC analysis depends on the
(1) Quality of materials (2) Cost of materials
(3) Quantity of materials used (4) Annual consumption value of materials

50. As the volume of inventory increases, the following cost will increase
(1) Stockout cost (2) Ordering cost (3) Procuring cost (4) Inventory carrying cost

51. ------- is a legal offer to purchase.

(1) Purchase Order (2) Quotation (3) Receiving order (4) Supplier's invoice

52. The transit time between work centers is _____.

(1) Run time (2) Move time (3) Setup time (4) Wait time

53. If the shortage cost is infinity,

(1) No shortages are allowed (2) No inventory carrying cost is allowed
(3) Ordering cost is zero (4) Purchase cost = Carrying cost

54. The type of inventory method that comprises a greater number of accounting transactions is known as ___.
(1) Periodic inventory method (2) Perpetual inventory system
(3) Finished goods inventory method (4) Fixed order period inventory system

55. A company that maintains a sufficient safety margin by having extra inventory against certain situations is
termed as ___.
(1) Inventory (2) Lot size (3) Safety stock (4) Lead

56. Last year, a manufacturer produced 15000 products which were sold for Rs. 300 each. At that volume, the
fixed costs were Rs. 15.2 lacs and total variable costs were Rs. 21 lacs. The break-even quantity of product
would be
(1) 4000 (2) 7800 (3) 8400 (4) 9500

57. The following is the general policy for A class items in ABC analysis:
1. Very strict control.
2. Frequent review of their consumption.
3. Safety stock kept.
Which of these statements is/are correct?
(1) 1 only (2) 1 and 2 only (3) 2 only (4) 1, 2 and 3

58. When the ordering cost is increased to 4 times, the EOQ will be increased to
(1) 2 times (2) 3 times (3) 8 times (4) Remain same

59. The annual demand of a commodity in a supermarket is 80000. The cost of placing an order is 4,000 and the
inventory cost of each item is 40. What is the economic order quantity?
(1) 2000 (2) 4000 (3) 5656 (4) 6666

60. Purification of inventory means

(1) Cleaning of inventories (2) Disposing of inventories
(3) Processing of inventories (4) Storing of inventories in bins

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61. An organization uses ABC approach for categorization of its stock. Which of the following describe class C
items?
(1) High value and high risk (2) High value and low risk
(3) Low value and high risk (4) Low value and low risk

62. A company uses 2555 units of an item annually. Delivery lead time is 8 days. The reorder point (in number of
units) to achieve optimum inventory is
(1) 7 (2) 8 (3) 56 (4) 60

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