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PGDM In Logistics & Supply Chain Management Solve Assignment For Inventory Management

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PGDM In Logistics & Supply Chain Management Solve Assignment For Inventory Management 

 

INVENTORY MANAGEMANT

 

1.  Do organizations need to carry inventory? Why?

2.         What is the relationship between inventory investment and profitability of an organization?        

3.         Identify at least four alternatives that organizations use as a basis for fixing the order quantity?  

4.         What is the basis for service level and safety stock? 

5.         Why organizations adopt a selective system of inventory control?   

6.         Consider the inventory planning problem. Write down the relevant total cost equation in each of the following

a.     The organization can fetch discount on price if large quantities are ordered.

b.    There is a benefit in transportation cost if ordered in full truckloads.

7.         When is it appropriate to use the ABC classification and FSN classification schemes

8.         Discuss and write two dimensional scheme of classification using ABC and VED 

 

 

Case Detail: 

 

 

Case study: Please read the case study given below and answer questions given at the end.

 

 

CASE-STUDY

 

 

 

IMPORTANCE OF INVENTORY MANAGEMENT

 

Number of inventory turns of various sectors of Industries in India is as follows

 

 

Sector of Industry

FY 2002

FY2001

FY2000

FY199

Automobile: LCV/HCV

7.19

6.36

7.43

6.19

Automobile: Passenger Car

10.11

8.88

7.98

7.62

Cement

7.68

7.47

7.69

8.04

Computer hardware

9.13

8.89

8.30

8.31

Engineering: General

4.68

5.15

3.51

1.65

Engineering: Heavy

2.50

2.35

2.88

3.46

Pharmaceutical

5.55

5.23

5.38

5.32

Petrochemicals

8.56

3.44

4.93

5.07

Steel

4.99

4.58

4.27

2.81

Av No of Turns

6.71

5.82

5.82

5.39

Av Inventory ( Days)

54

63

63

68

 

 

Inventory Management is an important aspect for organizations for a variety of reasons. The foremost reason is the continued dominance of material cost in the total cost of a manufactured product. During 1998-99, brakes India spent about Rs 166 crores in purchase of materials, which accounted nearly 55 percent of goods sold during the year. Hence, proper material planning and control will offer good scope for cost reduction.

 

 

Secondly, investment in inventory continues to a significant portion of current assets in our country. As shown in the table above, on an average, Indian organizations carry in excess of 50 days of inventory. This is very high considering the international standards, which is in the range of 15-20 days of inventory.

 

On the other hand, some of the best managed companies in our country report high inventory turn. For example, Lucas TVS, Chennai –based auto-electrical manufacturer, reported about 30 inventory turns indicating merely12 days of inventory. The higher the inventory is, higher the total investment (due to increase in the current assets) and lower the retained earnings ( due to higher interest charges on the working capital ) will be. Therefore, inventory investment has a direct multiplier effect on ROI. The higher the investment in inventory, the lower the ROI will be.

 

Go through the case and answer the questions given below-

 

 

 

Please give your answer in at least 25 words and press save and continue button.

 

S. No.  Questions        Marks - 10

1.         What are the practical reasons which attribute to high levels of inventory?

 

 2.        Give certain suggestions or specific techniques to overcome the problem.

 

 

 

Assignment C

 

Question No.  1           Marks - 10

Types of inventories are-        

 

Options          

  1. Cyclic stock   
  2. Pipeline inventory      
  3. Safety stock   
  4. All of these    

 

Question No.  2           Marks - 10

Cost of ordering is-    

 

Options          

  1. Stationary cost for Purchase order     
  2. Man hours to issue PO           
  3. Expenses on account of tendering action      
  4. All of these    

 

Question No.  3           Marks - 10

Carrying cost is-         

 

Options          

  1. Transport cost
  2. Space occupied cost   
  3. Interest cost on stock value   
  4. Both a. & b.   

 

Question No.  4           Marks - 10

Cost of stock out is – 

 

Options          

  1. Loss of production when material is not there          
  2. Stock of finished goods is zero         
  3. Pile up on shop floor  
  4. none   

 

Question No.  5           Marks - 10

Inventory management is for-

 

Options          

  1. Creating stock out      
  2. Balancing various types of costs        
  3. Making losses 
  4. All the above  

 

Question No.  6           Marks - 10

A class item is-           

 

Options          

  1. Having highest stock 
  2. Having highest value 
  3. Having lowest value  
  4. None of the above     

 

 

Question No.  7           Marks - 10

C class items constitute-        

 

Options          

  1. 70% of the items in number   
  2. 10% of the items in number   
  3. 30% of the items in number   
  4. None  

 

Question No.  8           Marks - 10

VED stands for-        

 

Options          

  1. Variable, Exact & Double      
  2. Vital, Essential & Desirable   
  3. Value, Efficiency & Direct    
  4. None of the above     

 

Question No.  9           Marks - 10

EOQ stands for-        

 

Options          

  1. Equal basis of quantity          
  2. Economic order quantity       
  3. Economy on quotient 
  4. None of these 

 

Question No.  10         Marks - 10

XYZ is a category of materials based on-     

 

Options          

  1. Urgency         
  2. Frequency      
  3. Weight           
  4. All of these    

 

Question No.  11         Marks - 10

Reorder level is the point where-       

 

Options          

  1. Stock is nil     
  2. Safety stock level       
  3. Service level   
  4. None

 

Question No.  13         Marks - 10

Ordering cost will be in the case of-  

 

Options          

  1. Imported material      
  2. Indigenous material   
  3. Local purchase           
  4. None  

 

Question No.  14         Marks - 10

Pipe line inventory is-

 

Options          

  1. Stock in finished god own     
  2. Raw material on shop floor    
  3. Scrap near the machine          
  4. None  

 

Question No.  15         Marks - 10

Seasonal inventories varies-   

 

Options          

  1. On daily basis
  2. Monthly basis 
  3. Season basis   
  4. None  

 

Question No.  16         Marks - 10

Average inventories in days is-          

 

Options          

  1. Stock piled up in stores          
  2. Finished one   
  3. Both a& b      
  4. None  

 

Question No.  17         Marks - 10

Inventory term stands for-     

 

Options          

  1. Idle resource for future use    
  2. Active resource          
  3. Non value resource    
  4. nil       

 

Question No.  18         Marks - 10

.High inventory levels have effect on profitability of a firm-

 

Options          

  1. Positive          
  2. Negative         
  3. No effect        
  4. None  

 

Question No.  19         Marks - 10

Firms are trying to keep inventory lvels-       

 

Options          

  1. Very high       
  2. Moderate        
  3. Very low        
  4. None

 

Question No.  20         Marks - 10

Inventory management helps in-        

 

Options          

  1. Reduce wastages       
  2. Reduce obsolescence 
  3. Improve quality          
  4. None  

 

Question No.  21         Marks - 10

Operating inventories are-      

 

Options          

  1. Min to run production
  2. For final dispatch       
  3. Both of these 
  4. None

 

Question No.  22         Marks - 10

Timing of demand stands for-           

 

Options          

  1. Product is seasonally required           
  2. Product is always required     
  3. Both a& b      
  4. None  

 

Question No.  23         Marks - 10

Good inventory management is-        

 

Options          

  1. Replenish the item the moment it is consumed         
  2. Replenish after one day         
  3. Both a& b      
  4. None  

 

Question No.  24         Marks - 10

Insurance charge, when material is in transit is-        

 

Options          

  1. Carrying cost  
  2. Ordering cost 
  3. Obsolescence cost      
  4. None  

 

Question No.  25         Marks - 10

If level of inventory is high-  

 

Options          

  1. Ordering cost will be minimum         
  2. Carrying cost will be Highest
  3. Both b & c     
  4. None

 

Question No.  26         Marks - 10

. Price discount for large order will-  

 

Options          

  1. Decrease ordering cost           
  2. Increase carrying cost
  3. Both b & c     
  4. None

 

Question No.  27         Marks - 10

Instantaneous replenishment will create-       

 

Options          

  1. Zero carrying cost      
  2. Very high carrying cost          
  3. Moderate carrying cost          
  4. None

 

Question No.  28         Marks - 10

Continuous review of inventory is-   

 

Options          

  1. Two bin system          
  2. One bin system          
  3. Both a& b      
  4. None

 

Question No.  29         Marks - 10

Periodic review system is-     

 

Options          

  1. Daily basis      
  2. After a certain period 
  3. after one year 
  4. None

 

Question No.  30         Marks - 10

EOQ balances-           

 

Options          

  1. Inventory carrying cost`         
  2. Inventory ordering cost         
  3. a & b  
  4. Obsolescence cost

 

Question No.  31         Marks - 10

ABC stands for-        

 

Options          

  1. Always better control
  2. 80% value & 20% number     
  3. Both a & b     
  4. None  

 

Question No.  32         Marks - 10

ABC & VED combination gives –    

 

Options          

  1. 9 categories for control          
  2. 6 categories    
  3. 3 categories    
  4. None of these

 

Question No.  33         Marks - 10

Safety stock is-          

 

Options          

  1. Saves the production 
  2. Ensures the continuity of production
  3. both a & b      
  4. None

 

Question No.  34         Marks - 10

Lead time is –

 

Options          

  1. Time taken for material receipt          
  2. Time between placement of order & receiving the material  
  3. Both a & b     
  4. None

 

Question No.  35         Marks - 10

Spares parts inventory is-       

 

Options          

  1. Cyclic in nature          
  2. Fixed  
  3. Continuous     
  4. None  

 

Question No.  36         Marks - 10

Non moving items are-           

 

Options          

  1. Not in use for a long  
  2. Not shifted from one place    
  3. Both a & b     
  4. None  

 

Question No.  37         Marks - 10

Slow moving items are-         

 

Options          

  1. Moving with a speed of 40 Km /Hr   
  2. Infrequent use
  3. Regular in use
  4. None

 

Question No.  38         Marks - 10

A type of items are-   

 

Options          

  1. Very high in value and less in number           
  2. Very important           
  3. Least important          
  4. None  

 

Question No.  39         Marks - 10

JIT stands for-

 

Options          

  1. Joint inspection & testing      
  2. Just in time     
  3. Both a & b     
  4. none

Question No.  40         Marks - 10

Standardization of items helps in controlling -          

 

Options          

  1. Variety of components          
  2. Number of components         
  3. Both a & b     
  4. None
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PGDM In Logistics & Supply Chain Management Solve Assignment For Inventory Management (General)
Short Name or Subject Code:  Inventory Management
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