Cambridge International A Level · Business (9609)

Inventory management: Practice Questions

5 multiple-choice questions marked as you go, and 5 written questions with worked solutions. All on Inventory management.

10 questions24 marksFree, no account

Question 1

1 mark

Which of the following describes buffer inventory in a business?

Question 2

1 mark

Which of the following is a precondition most likely necessary for a business to successfully implement a Just-in-Time (JIT) inventory management system?

Question 3

1 mark

An inventory control chart for a retailer shows the following data:
- Re-order level: 600 units
- Buffer stock: 150 units
- Lead time: 15 days
Using this information, calculate the average daily usage of the stock.

Question 4

1 mark

Which of the following is a key characteristic of a Just in Time (JIT) inventory management system?

Question 5

1 mark

A manufacturing firm is reviewing its inventory policy. Which of the following is specifically categorized as an opportunity cost of holding high levels of finished goods inventory?

Question 6

2 marks

Identify two primary costs associated with a business holding high levels of inventory.

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Question 7

4 marks

Explain how the adoption of a Just-in-Time (JIT) inventory system affects a business's working capital compared to a Just-in-Case (JIC) system.

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Question 8

6 marks

Analyze how a significant increase in supplier lead time would affect the re-order level and buffer stock requirements as represented on a standard inventory control chart.

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Question 9

4 marks

A manufacturing business that produces custom bicycles must manage its various stages of production and stock levels effectively.

(a) Identify two types of inventory held by this manufacturer, other than finished goods.

(b) Explain the term lead time.

(c) State one reason why a business would hold raw materials as inventory.

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Question 10

3 marks

A retail business, 'DailyMart', maintains various levels of stock to satisfy customer demand and prevent stock-outs.

(a) Define the term buffer inventory.

(b) Explain two potential disadvantages to 'DailyMart' of holding high levels of inventory.

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