Chapter 18 CD – Inventory Management with Known Demand
True / False Questions
1. Administrative costs provide a strong incentive to place larger orders.
2. Setup costs can occur through purchasing or manufacturing products.
3. The objective of inventory management is to minimize the cost of holding inventory.
4. The objective of an inventory policy is to minimize the total inventory cost per unit time.
5. When developing an inventory policy, the only relevant costs are the variable costs.
6. An example of an inventory holding cost is the cost of moving goods to temporary storage
after receipt from a supplier.
7. Inspection of goods for quality and quantity upon arrival is part of setup costs.
