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MCQ on Inventory Management

1. The method of regular physical verification of material throughout the year is known as
(A) Periodic stock taking
(B) Bin card system
(C) Continuous stock taking
(D) Stock ledger system

2. In an inflationary situation, which system of inventory valuation shows higher profits
(A) LIFO
(B) FIFO
(C) HIFO
(D) Weighted average

3. Which of the following is recorded by bin card ?
(A) Quantity
(B) Quantity and value
(C) Value
(D) Quality

4. Under which of the following inventory control technique, the maximum and minimum level of each stock is laid down
(A) Min-max plan
(B) Two bin system
(C) Order cycle system
(D) ABC analysis

5. Under which of the following inventory control techniques, two piles or bundles are maintained for each item of stock
(A) Min-max plan
(B) Order cycling system
(C) Two-bin system
(D) ABC analysis

6. A store ledger is a record of receipts, issues, and closing balances of material by entering
(A) Quantity only
(B) Quantity and value
(C) Value only
(D) Quality only

7. Bill of material acts as an authorization to the store’s department in procuring the material and all the materials listed on the bill is sent to the.
(A) Sales department
(B) The Production department
(C) Accounts department
(D) Stores department

8. Which of the following formula cannot be used to calculate re-order level ?
(A) Minimum level + consumption during lead time
(B) Maximum consumption × maximum re-order period
(C) Maximum consumption × lead time + safety stock
(D) Minimum consumption × minimum re-order period

9. Which of the following method is based on the assumption that the costliest materials are issued first and inventory is valued at the lowest possible price ?
(A) FIFO method
(B) UFO method
(C) Highest-in-first-out method
(D) Weighted average method

10. If the minimum stock level and average stock level of raw material ‘A’ are 4,000 & 9,000 emits respectively, what is its reorder quantity
(A) 8,000 units
(B) 11,000 units
(C) 10,000 units
(D) 9,000 units

11. In case of rising prices, the FIFO method will provide –
(A) Lowest value of closing stock and profit
(B) Highest value of closing stock and profit
(C) Highest value of the closing stock but the lowest value of profit
(D) Lowest value of the closing stock but highest value of profit

12. FIFO method of valuing material issues is suitable in times of ______.
(A) Rising prices
(B) Falling prices
(C) Price fluctuation
(D) Boom period

13. Which one of the following statements is true in ABC classification of materials
(A) items of material have moderate 96 of cost and high 96 of quantity
(B) ‘A’ items of material have high 96 of cost and low 96 of quantity
(C) ‘A’ items of material have high 96 of cost and high 96 of quantity
(D) ‘B’items of material have moderate 96 of cost and low 96 of quantity

14. In a situation of rising prices, profit and tax liability would be lower under method than under method of material issue pricing.
(A) FIFO; LIFO
(B) LIFO; FIFO
(C) LIFO; Average
(D) FIFO; Average

15. The technique of economic order quantity is losing significance since the development of
(A) Perpetual inventory
(B) Just-in-time
(C) First-in-first-out
(D) ABC analysis

16. A written comprehensive order, with specification, material code, and quantity sent to inform the purchasing department, of a need for material is called _______.
(A) Purchase order
(B) Bill of material
(C) Purchase requisition
(D) Bin card

17. A, B, C analysis is
(A) a system of profit planning
(B) a technique of financial analysis
(C) a technique of inventory control
(D) a technique of profit determination

18. Two avoidable reasons for the difference between bin card and physical quantity of material may be and wrong posting in the bin card.
(A) Pilferage
(B) Normal
(C) Abnormal
(D) Reasonable

19. In which of the following methods, material issues are priced at a predetermined rate?
(A) Replacement price method
(B) Specific price method
(C) Inflated price method
(D) Standard price method

20. Which of the following does not normally appear on a material requisition form?
(A) Job number
(B) Unit cost
(C) Supplier’s name
(D) Quantity requisitioned

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