1. One important use of inventories in manufacturing is to decouple operations through the use of work in process inventories.
True False
TRUE
Decoupling operations is an important use of inventories.
2
2. The objective of inventory management is to minimize the cost of holding inventory.
True False
FALSE
The objective of inventory management is to allow satisfactory customer service while keeping costs down.
3
3. A retail store that carries twice the inventory as its competitor will provide twice the customer service level.
True False
FALSE
There is a limit to how high service level can go; if the competitor's service level is 90%, the retailer can't double that.
4
4. The overall objective of inventory management …show more content…

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30. The inventory value of the supply chain exceeds the inventory value of the organization's work in process inventory.
True False
TRUE
There can be raw materials and finished goods inventory at the organization. Other organizations in the supply chain will have inventories, too.
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31. Safety stock is held because we anticipate future demand.
True False
FALSE
Safety stock is held because we anticipate fluctuations in future demand or in lead time.
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32. Variability in demand and/or lead time can be compensated for by safety stock.
True False
TRUE
Safety stock can be used to accommodate these.
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33. Solving quality problems can lead to lower inventory levels.
True False
TRUE
Leaning out the organization can be facilitated by solving quality problems.
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34. ROP models assume that demand during lead time is composed of a series of dependent daily demands.
True False
FALSE
ROP models assume that demand during lead time is composed of a series of independent daily demands.
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35. Profit margins tend to be inversely related to inventory turns.
True False
TRUE
This is typically the case.
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36. In the fixed-order interval model, the order size is the same for each order.
True False
FALSE
Order size varies from order to order in a fixed-order interval model.
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37. The fixed-order interval model requires a continuous monitoring of inventory levels.
True False