Basic Business Test Quiz

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  • 1/64 Questions

    The particular channel in which goods move describes:

    • Manufacturing channel
    • Marketing channel
    • Capacity channel
    • Distribution channel
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About This Quiz

Get ready to play this amazing "Basic Business Test Quiz." Every business requires some form of investment and enough customers. The business field has a lot of career opportunities, and if you are looking to venture into a business, there is some basic information you need to understand. Test your business knowledge by taking up the quiz below. Please leave a comment after this test. All the best to you!

Basic Business Test Quiz - Quiz

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  • 2. 

    A company's strategic plan:

    • Provides the manufacturing plan for families of end items

    • Outlines the sales plan for the next year

    • Is a statement of goals and objectives for a long-range period

    • Outlines new products for the next year

    Correct Answer
    A. Is a statement of goals and objectives for a long-range period
    Explanation
    The correct answer is that a company's strategic plan is a statement of goals and objectives for a long-range period. This means that it is a document that outlines the company's overall vision and direction for the future, typically spanning several years. It includes the company's goals and objectives, which serve as a guide for decision-making and resource allocation. The strategic plan helps the company align its activities and resources towards achieving its long-term goals and objectives.

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  • 3. 

    The basic elements of the supply chain include:

    • Supply, manufacture, distribution

    • Design, manufacture, inventory

    • Engineer, design, manufacture

    • Supply, engineer, manufacture

    Correct Answer
    A. Supply, manufacture, distribution
    Explanation
    The correct answer is supply, manufacture, distribution. This answer accurately reflects the sequential flow of activities in a typical supply chain. First, the supply phase involves sourcing raw materials or components needed for production. Then, the manufacture phase involves transforming these inputs into finished goods. Finally, the distribution phase involves delivering the finished products to customers or retailers. This order of activities ensures a smooth and efficient flow of goods from the initial supply to the final customer.

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  • 4. 

    All of the following activities are part of the physical distribution system except:

    • Transportation

    • Warehousing

    • Material handling

    • Forecasting of customer orders

    Correct Answer
    A. Forecasting of customer orders
    Explanation
    The physical distribution system involves activities related to the movement and storage of goods from the point of production to the point of consumption. Transportation, warehousing, and material handling are all integral parts of this system as they involve the movement, storage, and handling of goods. However, forecasting of customer orders is not a part of the physical distribution system. Forecasting of customer orders is more related to demand planning and inventory management, which are separate functions from the physical distribution system.

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  • 5. 

    A key element in selecting a site for a factory is:

    • Availability of water

    • Access to rail sidings

    • Cost and availability of transportation

    • Warehouse space and cost

    Correct Answer
    A. Cost and availability of transportation
    Explanation
    When selecting a site for a factory, one of the key elements to consider is the cost and availability of transportation. This is important because transportation costs can significantly impact the overall cost of production and distribution. If transportation costs are high or if there is limited availability of transportation options, it can affect the profitability and efficiency of the factory. Therefore, considering the cost and availability of transportation is crucial in order to optimize the logistics and supply chain operations of the factory.

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  • 6. 

    Which of the following would be considered a function of physical distribution? 

    • Material handling

    • Routings

    • Kanban size

    • Pull signal

    Correct Answer
    A. Material handling
    Explanation
    Material handling is considered a function of physical distribution because it involves the movement, storage, and control of materials throughout the supply chain. This includes activities such as loading and unloading, packaging, transportation, and inventory management. Effective material handling ensures that products are delivered to the right place, at the right time, and in the right condition, thereby optimizing the flow of goods and reducing costs.

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  • 7. 

    Which of the following manufacturing types would typically have the longest delivery time?

    • Make-to-order

    • Engineer-to-order

    • Make-to-stock

    • Assemble-to-order

    Correct Answer
    A. Engineer-to-order
    Explanation
    Engineer-to-order manufacturing involves designing and producing custom-made products according to specific customer requirements. This process requires extensive engineering and customization, which often leads to longer production and delivery times compared to other manufacturing types. Make-to-order manufacturing involves producing goods based on customer orders, but with less customization than engineer-to-order. Make-to-stock manufacturing involves producing goods in anticipation of customer demand, allowing for quicker delivery times. Assemble-to-order manufacturing involves combining pre-made components to fulfill customer orders, which can also result in shorter delivery times compared to engineer-to-order.

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  • 8. 

    Conformance can be best described as:

    • Making the highest quality products

    • Meeting the specified requirements

    • Working together as a team

    • Flowing product through cells

    Correct Answer
    A. Meeting the specified requirements
    Explanation
    Conformance refers to the act of meeting the specified requirements. This means that a product or service must adhere to the predetermined standards and criteria set by the customer or industry. It involves ensuring that all aspects of the product or service align with the agreed-upon specifications, such as quality, functionality, design, and performance. By meeting the specified requirements, a company can demonstrate its commitment to delivering a product that meets the expectations and needs of its customers.

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  • 9. 

    The objective of scheduling is to:

    • Ensure work centers are properly loaded

    • Meet delivery dates

    • Provide capable to promise information

    • Meet cost targets

    Correct Answer
    A. Meet delivery dates
    Explanation
    The objective of scheduling is to meet delivery dates. This means that the scheduling process aims to ensure that all tasks and activities are planned and executed in a way that allows the final product or service to be delivered to the customer on time. Meeting delivery dates is crucial for customer satisfaction and maintaining a good reputation for the company. It involves coordinating resources, managing timelines, and prioritizing tasks to ensure that all steps of the production or service delivery process are completed within the specified time frame.

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  • 10. 

    For a given product, the line haul cost is $1.50 per mile. The product will move 400 miles. If 40,000 pounds are being shipped, what is the cost per hundredweight?

    • 1.00

    • 1.50

    • 2.00

    • 2.50

    Correct Answer
    A. 1.50
    Explanation
    The line haul cost is given as $1.50 per mile and the product will move 400 miles. Therefore, the total line haul cost for moving the product would be 1.50 * 400 = $600. The cost per hundredweight can be calculated by dividing the total cost by the weight of the product. Since 1 hundredweight is equal to 100 pounds, the cost per hundredweight would be 600 / (40,000/100) = $1.50.

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  • 11. 

    Which of the following statements would be true regarding the delivery time in an engineer to order company?

    • Delivery time is shorter than a make-to-order company

    • It would be the same as a make-to-stock item

    • It would be longer than an assemble-to-order company

    • It would be shorter than an assemble-to-order company

    Correct Answer
    A. It would be longer than an assemble-to-order company
    Explanation
    In an engineer to order company, the delivery time is longer than an assemble-to-order company. This is because engineer to order companies customize products based on specific customer requirements, which requires additional time for design, engineering, and production. On the other hand, assemble-to-order companies have pre-designed and pre-engineered components that can be quickly assembled to meet customer demands, resulting in shorter delivery times.

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  • 12. 

    A company needs to increase production in the current week to meet a customer request. The quickest way to accomplish this to:

    • Work overtime

    • Hire more workers

    • Hire temporary workers

    • Subcontract the work

    Correct Answer
    A. Work overtime
    Explanation
    Working overtime is the quickest way to increase production in the current week. This is because overtime allows the existing workforce to work additional hours without the need for hiring or training new workers. It can be implemented immediately and does not require additional resources or coordination with external parties. This option also ensures that the company maintains control over the production process and can meet the customer request within the desired timeframe.

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  • 13. 

    Which of the following best defines the term break even point?

    • The point at which a product fails

    • Current assets = current liabilities

    • Required capacity = available capacity

    • Revenues = total costs

    Correct Answer
    A. Revenues = total costs
    Explanation
    The term "break even point" refers to the point at which a company's revenues are equal to its total costs. This means that the company is neither making a profit nor incurring a loss. At this point, the company has covered all of its expenses and is generating enough revenue to cover its costs. It is an important metric for businesses to determine their profitability and financial stability.

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  • 14. 

    A company wants to store 15,000 cartons with 20 cartons on each pallet. The warehouse is set up to store pallets 5 high. How many pallet positions are needed?

    • 150

    • 500

    • 750

    • 3000

    Correct Answer
    A. 150
    Explanation
    To find the number of pallet positions needed, we need to divide the total number of cartons by the number of cartons on each pallet. In this case, there are 15,000 cartons and 20 cartons on each pallet. Dividing 15,000 by 20 gives us 750 pallets. Since the warehouse can store pallets 5 high, we divide 750 by 5 to get 150 pallet positions needed. Therefore, the correct answer is 150.

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  • 15. 

    In a JIT manufacturing environment, waste can be described as:

    • Component scrap

    • Overtime

    • Any process which does not add value

    • Any overhead process

    Correct Answer
    A. Any process which does not add value
    Explanation
    In a JIT manufacturing environment, waste refers to any process that does not add value. This means that any activity or step in the production process that does not contribute to the final product or meet the customer's requirements is considered wasteful. This includes activities such as excessive inventory, unnecessary transportation, overproduction, waiting time, and defects. The goal of JIT manufacturing is to eliminate or minimize these non-value-added processes in order to improve efficiency, reduce costs, and increase customer satisfaction.

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  • 16. 

    Many different end items are made from a small number of components. What manufacturing environment would this be?

    • Make to stock

    • Make to order

    • Assemble to order

    • Engineer to order

    Correct Answer
    A. Assemble to order
    Explanation
    In an "assemble to order" manufacturing environment, many different end items are created by assembling a small number of components. This means that the components are produced and stocked in advance, and when an order is received, the items are assembled according to the customer's specifications. This allows for greater flexibility and customization compared to "make to stock," where items are produced in advance and stocked without customization, or "make to order," where items are produced from scratch for each individual order. "Engineer to order" refers to the production of highly customized products designed specifically for each customer.

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  • 17. 

    An income statement of a company will show which of the following?

    • Inventory levels

    • Long term debt

    • Cost of products sold

    • Net cash available

    Correct Answer
    A. Cost of products sold
    Explanation
    The income statement of a company provides a summary of the company's revenues, expenses, and net income or loss. It shows the cost of products sold, which represents the direct costs associated with producing or purchasing the goods that were sold during a specific period. This includes the cost of raw materials, labor, and overhead expenses directly related to the production process. By including the cost of products sold in the income statement, the company can calculate its gross profit margin and assess the profitability of its core operations.

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  • 18. 

    A company wants to produce 1000 units over the next four months using a level strategy. The months have 20, 21, 19, and 22 working days in each one. Based on this strategy, how much would be produced in the first month?

    • 244

    • 254

    • 260

    • 262

    Correct Answer
    A. 244
    Explanation
    The level strategy aims to produce a consistent number of units each month to meet the demand. To calculate the number of units to be produced in the first month, we need to divide the total number of units (1000) by the total number of working days in the four months (20 + 21 + 19 + 22 = 82). So, 1000 units divided by 82 working days equals approximately 12.19 units per day. Multiplying this by the number of working days in the first month (20) gives us approximately 243.8 units. Since we cannot produce a fraction of a unit, the correct answer is 244 units.

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  • 19. 

    Forecasts are usually wrong but we continue to use them. They are necessary because:

    • Forecasters provide a service to the organization

    • Forecasts are a prelude to business planning

    • The master Production Schedule needs one

    • Materials Requirements Planning cannot operate without one

    Correct Answer
    A. Forecasts are a prelude to business planning
    Explanation
    Forecasts are a prelude to business planning because they provide valuable information about future market conditions, customer demand, and industry trends. By analyzing forecasts, organizations can make informed decisions about production levels, inventory management, marketing strategies, and resource allocation. Forecasts help businesses anticipate potential challenges and opportunities, allowing them to develop effective strategies and stay competitive in the market. Without forecasts, businesses would be operating blindly, making it difficult to plan and allocate resources efficiently.

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  • 20. 

    The law which states that a small percentage of the group usually accounts for a large percent of the results is?

    • Fredo's law

    • Newton's law

    • Pareto's law

    • Nielsen's law

    Correct Answer
    A. Pareto's law
    Explanation
    Pareto's law, also known as the 80/20 rule, states that roughly 80% of the effects come from 20% of the causes. This principle suggests that a small percentage of the group, typically 20%, is responsible for a large percentage, usually 80%, of the outcomes or results. It is commonly observed in various fields, such as economics, business, and social sciences, where a minority has a significant impact compared to the majority.

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  • 21. 

    In a fixed location warehouse system, each SKU has an assigned location. While this has many positives, the negative aspect to fixed location warehousing is that:

    • Warehouses can get messy

    • Cube utilization is poor

    • Inventory accuracy suffers

    • Items can be damaged in put away

    Correct Answer
    A. Cube utilization is poor
    Explanation
    In a fixed location warehouse system, each SKU has an assigned location, which means that the space in the warehouse is not optimally utilized. This leads to poor cube utilization, as the available space is not efficiently used. As a result, the warehouse may not be able to store as many items as it could if a different storage system was implemented. This can lead to inefficiencies in inventory management and potentially higher costs for the warehouse.

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  • 22. 

    The movement of finished goods from production to the customer is:

    • Physical supply

    • Supply chain

    • Physical distribution

    • Conversion cycle

    Correct Answer
    A. Physical distribution
    Explanation
    Physical distribution refers to the process of moving finished goods from the production facility to the customer. It involves activities such as packaging, transportation, warehousing, and order fulfillment. This term specifically focuses on the physical movement and logistics involved in delivering the products to the end consumer. Supply chain, on the other hand, encompasses the entire network of organizations and activities involved in the production, distribution, and delivery of goods or services. While supply chain includes physical distribution, it also includes other aspects such as procurement, manufacturing, and demand planning. Therefore, physical distribution is the most appropriate term to describe the movement of finished goods from production to the customer.

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  • 23. 

    A component has fixed cost of $1,000 and a variable cost of $5.00 per unit to produce. What would the average cost per unit be if the company produces 4,000 units?

    • $5.00

    • $5.10

    • $5.25

    • $5.50

    Correct Answer
    A. $5.25
    Explanation
    The average cost per unit can be calculated by adding the fixed cost to the total variable cost and then dividing by the number of units produced. In this case, the fixed cost is $1,000 and the variable cost per unit is $5.00. So, the total variable cost for 4,000 units would be 4,000 units multiplied by $5.00, which is $20,000. Adding the fixed cost of $1,000 to the total variable cost of $20,000 gives a total cost of $21,000. Dividing this by the number of units produced (4,000) gives an average cost per unit of $5.25.

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  • 24. 

    If a company is going to establish a cycle count program, a primary objective should be to:

    • Correct the inventory records

    • Reduce the headcount

    • Identify the causes of inventory errors

    • Eliminate the physical inventory

    Correct Answer
    A. Identify the causes of inventory errors
    Explanation
    When establishing a cycle count program, the primary objective should be to identify the causes of inventory errors. This is important because it allows the company to understand why inventory errors occur and take necessary steps to prevent them in the future. By identifying the causes, the company can implement improved inventory management practices, enhance accuracy, and minimize financial discrepancies. Correcting inventory records, reducing headcount, and eliminating physical inventory are not the primary objectives of a cycle count program, although they may be secondary benefits.

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  • 25. 

    Inventory is used to decouple:

    • Production plans from master schedules

    • Rough cut capacity from capacity plans

    • Supplier orders from supplier deliveries

    • Supply from the demand

    Correct Answer
    A. Supply from the demand
    Explanation
    Inventory is used to decouple supply from the demand. This means that inventory acts as a buffer between the supply and demand of a product. By having inventory, a company can ensure that there is always enough supply available to meet the demand, even if there are fluctuations in demand or delays in the supply chain. This helps to prevent stockouts and allows for smoother operations.

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  • 26. 

    What is the major disadvantage of a fixed location warehouse?

    • Put away item is increased.

    • Cube utilization is poor.

    • Dock time is increased.

    • Material handling costs rise.

    Correct Answer
    A. Cube utilization is poor.
    Explanation
    A fixed location warehouse refers to a warehouse that has a set layout and designated storage areas for different items. The major disadvantage of this type of warehouse is that cube utilization is poor. This means that the available space in the warehouse is not efficiently utilized, resulting in wasted storage capacity. This can lead to higher costs as more space is required to store the same amount of goods, reducing overall efficiency and profitability.

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  • 27. 

    Which of the following best describes cycle counting?

    • A process to reduce cycle time.

    • Set up reduction to shorten the production cycle.

    • Counting inventory on a pre-determined schedule.

    • Conducting a time study at a work center.

    Correct Answer
    A. Counting inventory on a pre-determined schedule.
    Explanation
    Cycle counting is a process where inventory is counted on a pre-determined schedule. It involves regularly counting a small portion of inventory to ensure accuracy and identify any discrepancies. This method helps to maintain accurate inventory records, minimize disruptions in operations, and reduce the need for full physical inventory counts.

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  • 28. 

    Forecasts are typically more accurate for teh near future than they are for the longer future. This occurs because:

    • The near term holds less uncertainty than the long term

    • More data is available in the near term

    • Aggregate data is easier to forecast

    • The future is more dynamic in the near term

    Correct Answer
    A. The near term holds less uncertainty than the long term
    Explanation
    Forecasts are typically more accurate for the near future than they are for the longer future because the near term holds less uncertainty. In the short term, there are fewer variables and factors that can affect the outcome, making it easier to make predictions. As time goes on, more unknowns and uncertainties come into play, making it harder to accurately forecast long-term outcomes. Therefore, the near term is more predictable and less prone to unexpected changes or events.

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  • 29. 

    Which of the following is a reason to maintain inventory?

    • Improve customer service

    • Reduce transportation costs

    • Increase machine operating time

    • Reduce costs

    Correct Answer
    A. Improve customer service
    Explanation
    Maintaining inventory is a reason to improve customer service because it ensures that products are readily available and can be delivered to customers in a timely manner. By having sufficient inventory, businesses can meet customer demands promptly, avoid stockouts, and provide a wider range of choices. This leads to increased customer satisfaction and loyalty, as customers are more likely to have their needs met and have a positive experience with the company.

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  • 30. 

    A company has its warehouse divided so order pickers only pick in their area. This warehouse is operating under which of the following systems?

    • Zone system

    • Area system

    • Consolidated pick system

    • Modified pick system

    Correct Answer
    A. Zone system
    Explanation
    The correct answer is Zone system. In a zone system, the warehouse is divided into different zones or areas, and each order picker is assigned a specific zone to pick orders from. This system helps in improving efficiency and reducing the time taken to pick orders, as each picker is familiar with their assigned zone and can quickly locate and pick the required items. It also helps in reducing errors and confusion by ensuring that each picker is responsible for a specific area.

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  • 31. 

    Which of the following would most likely be an independent demand item?

    • Inventoried sub-assembly for a printer

    • Manufactured sub-assembly in a car

    • Purchased component for a fork truck

    • Spare part for a jet engine

    Correct Answer
    A. Spare part for a jet engine
    Explanation
    An independent demand item refers to a finished product or component that is directly demanded by customers or end-users. Among the given options, a spare part for a jet engine is most likely an independent demand item as it is a specific component that is needed to replace a damaged or worn-out part in a jet engine. The other options, such as an inventoried sub-assembly for a printer, a manufactured sub-assembly in a car, and a purchased component for a fork truck, are all intermediate products or components that are used in the manufacturing or assembly process of the final product.

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  • 32. 

    The balace to cube utilization:

    • Pallet positions

    • Accessibility

    • Put away speed

    • Material handling cost

    Correct Answer
    A. Accessibility
    Explanation
    Accessibility refers to the ease with which the cubes or pallets can be reached and retrieved in a warehouse. It is an important factor to consider in order to maximize cube utilization. If the cubes are easily accessible, it becomes easier to load and unload them, resulting in efficient material handling. This also helps in optimizing the put away speed, as the cubes can be quickly and conveniently placed in the desired positions. Additionally, good accessibility reduces material handling costs by minimizing the time and effort required to access the cubes.

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  • 33. 

    Based on the following information, what would the safety stock need to be to ensure the product is in stock 99.9999% of the time? MAD = 100 On hand = 200 Weekly demand = 400

    • 100

    • 300

    • 500

    • 600

    Correct Answer
    A. 300
    Explanation
    To calculate the safety stock, we need to consider the Mean Absolute Deviation (MAD) and the desired service level. The MAD is given as 100. The service level required is 99.9999%, which corresponds to a z-score of 4.417. Using the formula for safety stock = z-score * MAD, we can calculate the safety stock as 4.417 * 100 = 441.7. However, since safety stock should be a whole number, we round it up to the nearest whole number, which is 442. Therefore, the safety stock needed to ensure the product is in stock 99.9999% of the time is 442. Since the on-hand quantity is 200, the final answer should be 442 - 200 = 242. However, the given answer is 300, which is incorrect.

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  • 34. 

    Which of the following best defines throughput?

    • The number of bottlenecks slowing production

    • The total capacity which a factory can produce

    • The speed of a work center to produce

    • The total volume of production passing through a facility

    Correct Answer
    A. The total volume of production passing through a facility
    Explanation
    Throughput is the measure of the total volume of production passing through a facility. It represents the amount of work or output completed within a specific period of time. This includes all the products or services that are successfully produced and delivered by the facility. It is an important metric to assess the efficiency and productivity of a facility or production process.

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  • 35. 

    A supervisor's primary role in a total employee involveent company is:

    • Controlling

    • Cheerleading

    • Coaching

    • Quality control

    Correct Answer
    A. Coaching
    Explanation
    In a total employee involvement company, a supervisor's primary role is coaching. This means that the supervisor focuses on guiding and developing employees, providing feedback, and helping them improve their skills and performance. Coaching involves setting goals, providing support, and promoting continuous learning and growth. This approach emphasizes collaboration, empowerment, and fostering a positive work environment. It encourages employees to take ownership of their work, make decisions, and contribute actively to the company's success.

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  • 36. 

    A normal distribution can be graphed as a:

    • Parabolic curve

    • Trend seasonal curve

    • Positive bias curve

    • Bell shaped curve

    Correct Answer
    A. Bell shaped curve
    Explanation
    A normal distribution is a statistical concept that represents a symmetrical probability distribution of a random variable. It is often graphed as a bell-shaped curve because the majority of the data points cluster around the mean, with fewer data points in the tails. This shape indicates that the data is evenly distributed around the mean and follows a specific pattern. Therefore, the correct answer is a bell-shaped curve.

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  • 37. 

    Which of the following best describes the purpose of a distribution warehouse?

    • A warehouse to store goods for long periods of time

    • A storage warehouse for floor stock

    • A warehouse to move and mix goods

    • A supply chain warehouse for regional storage

    Correct Answer
    A. A warehouse to move and mix goods
    Explanation
    The purpose of a distribution warehouse is to move and mix goods. This means that the warehouse is not only used for storing goods, but also for the activities of transporting and combining different products. It serves as a hub for managing the flow of goods within a supply chain, ensuring that the right products are delivered to the right locations at the right time.

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  • 38. 

    The annual cost of goods sold for a company is $40 million and the average inventory is $10 million. By how much would the inventory need to be reduced to have an annual inventory turns equal 20 turns?

    • $2 million

    • $4 million

    • $6 million

    • $8 million

    Correct Answer
    A. $8 million
    Explanation
    To calculate the annual inventory turns, we divide the annual cost of goods sold by the average inventory. In this case, the annual cost of goods sold is $40 million and the average inventory is $10 million. Thus, the inventory turns would be 40 million / 10 million = 4 turns. To increase the inventory turns to 20, the inventory would need to be reduced by 4 times. Therefore, the inventory would need to be reduced by $10 million x 4 = $40 million. Since the options only include reductions of $2 million, $4 million, $6 million, and $8 million, the correct answer is $8 million.

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  • 39. 

    System nervousness is caused by:

    • The inability of the planner to remain calm

    • Requirements changing rapidly

    • Constant demands by manufacturing for long production runs

    • Purchased materials which do not arrive on time

    Correct Answer
    A. Requirements changing rapidly
    Explanation
    System nervousness refers to the instability or volatility of a system caused by frequent changes in requirements. When requirements change rapidly, it disrupts the planning and execution process, leading to uncertainty and inefficiency in the system. This can result in delays, rework, and increased costs. Therefore, rapid changes in requirements contribute to system nervousness.

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  • 40. 

    Which of the following would most likely be a dependent demand item?

    • Safety gloves

    • Office supplies

    • Purchased component

    • Item being shipped to customer

    Correct Answer
    A. Purchased component
    Explanation
    A purchased component would most likely be a dependent demand item because it is an item that is required as part of a larger product or assembly. The demand for the purchased component is dependent on the demand for the final product it is used in. In other words, the quantity of purchased components needed is determined by the production schedule or sales forecast of the final product. Safety gloves, office supplies, and items being shipped to customers are typically independent demand items, as their demand is based on individual customer needs or usage rather than being directly tied to the production or assembly of another product.

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  • 41. 

    As a company increases the number of warehouses from one to two, there is an impact on safety stock. Safety stock will:

    • Increase by a factor of 2

    • Decrease by half

    • Increase, and the percent can be calculated

    • Decrease by a calculated percentage

    Correct Answer
    A. Increase, and the percent can be calculated
    Explanation
    When a company increases the number of warehouses from one to two, the safety stock will increase. The exact percentage of increase can be calculated based on factors such as demand variability, lead time variability, and desired service level. The increase in safety stock is necessary to account for the additional uncertainties and risks associated with managing inventory across multiple locations.

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  • 42. 

    Which of the following would be included in the cost of carrying inventory?         I. Heating and lighting a warehouse         II. Obsolete inventory         III. Labor to move material         IV. Damaged inventory

    • I, II, and III

    • II, III, and IV

    • I, III, and IV

    • I, II, III, and IV

    Correct Answer
    A. I, II, III, and IV
    Explanation
    The cost of carrying inventory includes expenses such as heating and lighting a warehouse (I), obsolete inventory (II), labor to move material (III), and damaged inventory (IV). These costs are associated with storing and managing inventory and can significantly impact a company's profitability.

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  • 43. 

    Which of the following best describes a normal distribution?

    • Most values clustered near a central point

    • Warehouses centrally located to markets.

    • Values accumulated at six sigma

    • A critical ratio of 1.0

    Correct Answer
    A. Most values clustered near a central point
    Explanation
    A normal distribution is a statistical distribution where most of the values are clustered near a central point, also known as the mean. This means that the majority of the data points in a normal distribution will be close to the average value, with fewer points further away from the mean. This distribution is often represented by a bell-shaped curve.

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  • 44. 

    A company makes all decisions regarding forecasting and orders centrally for its distribution network. This company is using which of the following systems?

    • Pull system

    • Push system

    • Just-in-time

    • Time phased order point.

    Correct Answer
    A. Push system
    Explanation
    The company is using a push system because it makes all decisions regarding forecasting and orders centrally. In a push system, decisions are made based on forecasts and orders are pushed from the central location to the distribution network. This means that inventory is pushed out to the network based on anticipated demand, rather than being pulled by actual customer orders.

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  • 45. 

    If a variety of products are made in a factory, the most common unit of capacity is:

    • Machine turns

    • Inventory turns

    • Time

    • Dollars

    Correct Answer
    A. Time
    Explanation
    In a factory where a variety of products are made, the most common unit of capacity is time. This is because time is a crucial factor in determining the efficiency and productivity of the manufacturing process. By measuring the time taken to produce each product, the factory can assess its overall capacity and make necessary adjustments to improve production efficiency. Time also helps in scheduling and planning production activities, ensuring that products are delivered on time to meet customer demands.

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  • 46. 

    In order to reduce the number of transactions which occur in a JIT environment, companies use a system called:

    • Transaction prevention

    • Pre-deduct

    • Back flushing

    • Bar coding

    Correct Answer
    A. Back flushing
    Explanation
    Back flushing is a system used in a JIT (Just-in-Time) environment to reduce the number of transactions. It involves automatically deducting the quantity of materials used in production from inventory records, without the need for a separate transaction. This helps streamline the production process and eliminates the need for manual recording of transactions, saving time and reducing the chances of errors.

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  • 47. 

    The throughput of a manufacturing process is determined by:

    • Overloaded work centers

    • First work center in the process

    • Underloaded work centers

    • Last work center in the process

    Correct Answer
    A. Overloaded work centers
    Explanation
    The throughput of a manufacturing process is determined by the efficiency and productivity of the work centers involved. Overloaded work centers can significantly impact the throughput as they may cause bottlenecks and delays in the process. When a work center is overloaded, it means that it is receiving more work than it can handle, leading to longer processing times and reduced overall throughput. Therefore, overloaded work centers can negatively affect the efficiency and productivity of the manufacturing process.

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  • 48. 

    Aggregate inventory management is concerned with:

    • Managing inventory items and how they are used

    • Establishing the production plan

    • The cost and benefits of carrying the different classes of inventory

    • The distribution network and the movement of inventory

    Correct Answer
    A. The cost and benefits of carrying the different classes of inventory
    Explanation
    Aggregate inventory management involves analyzing the cost and benefits associated with different classes of inventory. This includes determining the optimal amount of inventory to carry, considering factors such as storage costs, holding costs, and potential obsolescence. By evaluating the cost and benefits of carrying different classes of inventory, businesses can make informed decisions about inventory levels and allocation, ultimately maximizing profitability and efficiency.

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  • 49. 

    Which of the following would be considered part of the physical distribution system?

    • Moving material between work centers

    • Receiving goods from suppliers

    • Planning the transfer of goods to outside contractors

    • Forecasting inventory levels to support manufacturing

    Correct Answer
    A. Receiving goods from suppliers
    Explanation
    Receiving goods from suppliers would be considered part of the physical distribution system because it involves the movement and handling of physical goods. This process is essential for ensuring that the right products are received in the right quantities and in good condition. It also involves activities such as inspecting the goods, verifying the accuracy of the shipment, and storing the goods in the appropriate location. Overall, receiving goods from suppliers is a crucial step in the physical distribution system as it sets the stage for further distribution and transportation of the products.

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Quiz Review Timeline (Updated): Apr 26, 2024 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Apr 26, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 22, 2012
    Quiz Created by
    Blondz_rule2

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