1. Which of the following situations is an example of inventory being held as a way to balance supply and demand?

A) A manufacturer holds inventory of key components to maintain a level production schedule.
B) A manufacturer of seasonal products builds finished-goods inventory before the peak selling period.
C) A distributor maintains safety stock of slow-moving items at a central distribution center.
D) A retailer stocks a variety of sizes and colors of a fast-selling item to avoid losing sales.



2. A company's annual cost of goods sold is $350 million, and inventory carrying cost is 18%. The company averages four inventory turns. The cost savings resulting from increasing inventory turns from four to six would be:

A) $29,000,000.
B) $15,750,000.
C) $10,500,000.
D) $ 5,250,000.



3. Continuous improvement is best described as:

A) a never-ending effort to expose and eliminate root causes of problems.
B) a never-ending effort by the management team to reduce cycle time.
C) identifying and implementing big-step improvements within a process.
D) a process in which a supplier commits to replenishing inventory based on demand without receiving replenishment orders.



4. The factors to consider in the make-or-buy decision include costs, proprietary knowledge, and:

A) design history.
B) available capacity.
C) inventory balance.
D) warehouse location.



5. Using an independent service provider for logistics would be most appropriate in which of the following situations?

A) A shoe company that wants to penetrate a foreign market
B) A business that owns plants and warehouses globally
C) A financial services company that wants to expand its services
D) A cable television company that wants to add services