What is the purpose of Inventory Management?

The primary purpose of Inventory Management is to ensure there is enough goods or materials to meet demand without creating overstock, or excess inventory.

What are the 4 types of Inventory Management?

There are four main types of inventory: raw materials/components, WIP, finished goods, and MRO

What is Inventory Management?

Inventory Management is a systematic approach to sourcing, storing, and selling inventoryraw materials (components) and finished goods (products). In business terms, Inventory Management means the right stock, at the proper levels, in the right place, at the right time, and at the correct cost and price.

What are the three primary Inventory Management techniques?

The three most common Inventory Management strategies that most manufacturers operate by the pull strategy, the push strategy, and the just in time (JIT) strategy.

What is an exampl of Inventory Management?

One Inventory Management example is when a company orders too much of a product and then has to sell it at a discounted price. This can negatively impact the company's profit margin.

Inventory Management - MCQ Quiz With Answers

Take this quick test on inventory management to help you prepare for your exams and interviews. This test is especially useful for accounting and finance students.

The multiple choice question (MCQ) quiz has 10 questions with 4 potential answers each. Once you complete this short quiz, you should be able to perform well in any related exam or interview.

1. Safety stock + EOQ is equal to:

Average inventory
Normal maximum inventory
Absolute maximum inventory
Order point

2. The name for an order size that minimizes inventory ordering and carrying costs is:

Order point
Safety stock
EQO
EOQ
None of the above

3. Which one of the following is not an ordering cost?

Clerical and administrative costs of purchasing, accounting, and goods reception
Transportation costs
Unloading costs
None of the above

4. Which one of the following is not a carrying cost?

Storage charges (rent, lighting, heating, etc.)
Material handling costs
Stores staffing, equipment, maintenance, and running costs
Transportation costs

5. Extra inventory carried to serve as insurance against fluctuations in demand is called:

EOQ
Wastage inventory
Safety stock
Ordering point
Minimum level

6. Boomerang Ltd. had 200 units in its inventory on 30 November valued at $800. In December, it made the purchases and sales shown in the table below.

2/12	Purchased	1,000	@	$5.00 each
5/12	Sold	700	@	$7.50 each
12/12	Purchased	800	@	$6.20 each
15/12	Purchased	300	@	$6.60 each
21/12	Sold	400	@	$8.00 each
28.12	sold	500	@	$8.20 each

Using FIFO, which of the following is the inventory valuation?

$4,460
$4,340
$4,620
$3,500

7. The following information relates to Camberwell's year-end inventory of finished goods.

	Direct costs of materials and labor	Production overheads incurred	Expected selling and distribution overheads	Expected selling price
	$	$	$	$
Inventories category 1	2,470	2,100	480	5,800
Inventories category 2	9,360	2,760	150	12,040
Inventories category 3	1,450	850	190	2,560
	13,280	5,680	820	20,400

At what amount should the finished goods inventory be stated in the company\'s statement of financial position?

$13,280
$18,960
$18,760
$19,580

8. At its year-end, Crocodile Ltd. has 600 items of product A and 2,000 of product B, costing $10 and $5, respectively. The following information is available: 500 items of product A are defective and can only be sold at $8 each; 100 items of product B are to be sold for $4.50 each with selling expenses of $1.50 each. What figure should appear in Crocodile's statement of financial position for the inventory?

$57,000
$68,950
$68,800
$70,000

9. In a period of rising prices, the FIFO method of charging inventory issues to production will show a lower gross profit figure compared to the AVCO method. A. True B. False Closing inventory is a debt in the income statement. C. True D. False

10. Your firm's inventory valuation method is AVCO. On 1 June, there were 60 units in the inventory valued at $12 each. On 8 June, 40 units were purchased for $15 each and a further 50 units were purchased for $18 each on 14 June. On 21 June, 78 units were sold for $20 each. What is the value of the closing inventory on 30 June?