Question: One important use of inventories in manufacturing is to decouple operations through the use of work-in-process inventories.

Answer: TRUE

Decoupling operations is an important use of inventories.

Question: The objective of inventory management is to minimize the cost of holding inventory.

Answer: FALSE

The objective of inventory management is to allow satisfactory customer service while keeping costs down.

Question: A retail store that carries twice as much inventory as its competitor will provide twice the customer service level.

Answer: FALSE

There is a limit to how high service level can go; if the competitor’s service level is 90 percent, the retailer can’t double that.

Question: The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable.

Answer: TRUE

This is the overall objective of inventory management.

Question: The two main concerns of inventory control relate to the costs and the level of customer service.

Answer: TRUE

These are the essential facets of inventory control.

Question: To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: the timing and the size of orders.

Answer: TRUE

These are the fundamental decisions regarding inventory control.

Question: In the EOQ formula, holding costs under 10 percent are expressed as percentages, above 10 percent are expressed as annual unit costs.

Answer: FALSE

Holding costs are expressed in monetary terms, whether as a set value or as a percentage of the per-unit cost.

Question: DVD recorders would be an example of independent-demand items.

Answer: TRUE

Components of the DVD recorders would be dependent-demand items.

Question: Reorder point models are primarily used for dependent-demand items.

Answer: FALSE

Reorder point models are primarily used for independent-demand items.

Question: An example of inventory holding cost is the cost of moving goods to temporary storage after receipt from a supplier.

Answer: FALSE

These are ordering costs.