Question 1;The heart of TQM is;Answer;management competence.;customer satisfaction.;continual improvement.;knowing your competition.;2 points;Question 2;The implementation of TQM can not succeed unless:Answer;the company is willing to undergo immediate radical transformation of all of its processes.;the company has extensive market research on its markets, competitors, and customers.;it is fully supported by upper management and has the involvement of the CEO.;the lowest level of employees is willing to implement the program from the very beginning.;2 points;Question 3;When shopping for a vendor, a small business owner should seek:Answer;the best transfer of risk possible.;the lowest price.;the best price at acceptable quality.;to change vendors often in order to get the lowest price.;2 points;Question 4;The reorder point model requires that the small business owner know:Answer;the usage rate, the minimum level of stock, the lead time, and the EOQ.;who the supplier is, statistical process controls, and TQM.;the demand pattern for the product, reliability and proximity of the supplier, and who has title.;holding costs for the product, the usage rate, and the three "Cs" of the product.;2 points;Question 5;The small business gains what advantage by selling on consignment?Answer;Shorter lead time when reordering than with standard contracts;Better customer service;Not bearing the risk of loss for the consigned goods;Receiving absolute title to the goods prior to paying for them;2 points;Question 6;A key element to Deming's 14 Points is:Answer;ordering on the basis of price.;changing suppliers frequently.;conducting frequent quality inspections.;developing long-term relationships with vendors.;2 points;Question 7;Total Quality Management (TQM):Answer;defines world-class quality as 95% defect-free products and services.;has been implemented by about 90% of all American manufacturers and is now moving into the service industry.;relies on an army of quality inspectors to ensure that products and services meet quality targets.;is a lifelong process of continuous improvement that focuses on doing the job right the first time.;2 points;Question 8;The primary objective of the purchasing function is to:Answer;ensure an adequate turnover of merchandise.;acquire enough stock to ensure uninterrupted sales or production.;determine the "best" possible price for both supplies and finished products.;maximize carrying and set-up costs for the firm.;2 points;Question 9;Small business people need to remember that:Answer;there is an implicit cost of forgoing a cash discount.;they should avoid cash discounts.;by forgoing cash discounts they have more money for daily expenses.;cash discounts have hidden annual interest rates.;2 points;Question 10;Holding or carrying costs include the costs of:Answer;ordering materials and inventory.;receiving and inspecting items and all administrative costs.;insurance, taxes, depreciation, etc.;processing a purchase order.;2 points;Question 11;A danger of an excessive investment in inventory for the small business is:Answer;excessive inventory taxes by local and state government.;minimizing reordering costs.;creating too quick a turnover of inventory.;tying up an excessive amount of the firm's capital.;2 points;Question 12;Many small businesses build a(n) ________, or cushion, into their inventories in case demand runs ahead of the anticipated usage rate.Answer;safety stock;lead time;EOQ;stockout point;2 points;Question 13;The basic reorder point model assumes that:Answer;the firm's inventory usage rate is constant.;the lead time varies.;safety stock is set at 5%.;the demand pattern is constant.;2 points;Question 14;F.O.B. seller" means that:Answer;title passes to the buyer when the seller delivers the goods to the buyer.;risk of loss transfers to the buyer when the seller delivers the goods to the carrier.;the seller pays all shipping and transportation costs.;the buyer has both title and risk of loss as soon as the goods are paid for, regardless of their physical location.;2 points;Question 15;is the right to ownership of property and, for a small business owner, determines who has responsibility for ownership.Answer;Identification;Risk of loss;Concept of title;F.O.B.;2 points;Question 16;Store owners and employees may apprehend and charge a shoplifter:Answer;merely on the suspicion that they have stolen something.;if the individual puts something in their bag or pocket without paying for it but hasn't left the store.;only if the theft amounts to more than $25.;only if they see the theft and can prove the merchandise belongs to the store and wasn't paid for.;2 points;Question 17;A physical inventory count should be taken at least:Answer;once a week.;once a year.;every six months.;daily.;2 points;Question 18;Combining ________ with a POS system gives a small business owner a state-of-the-art checkout system and further extends the abilities of the POS system in the information it provides the owner.Answer;TQM;an EDI system;universal product code labels and scanners;an ABC system;2 points;Question 19;A form of inventory management used in manufacturing that stresses a harmonious relationship with suppliers is:Answer;CRM.;TQM.;Efficient Consumer Response.;JIT II.;2 points;Question 20;A retail version of Just-In-Time inventory control is called:Answer;EDI;TQM.;Efficient Consumer Response.;JIT II.;2 points;Question 21;The inventory turnover ratio is computed by:Answer;dividing the firm's cost of goods sold by its average inventory.;dividing average inventory by firm's cost of goods sold.;dividing the firm's revenue by its average inventory.;dividing all costs by its average inventory.;2 points;Question 22;C" items, in an ABC analysis:Answer;are those items that account for a moderate dollar usage volume.;are those that are low-cost and high-volume by nature.;do not require detailed record keeping or inventory control.;should be tracked with analytical tools and frequent counts.;2 points;Question 23;A firm's ________ expresses the number of times per year the business sells all of its inventory.Answer;liquidity ratio;inventory turnover ratio;operating ratio;quick ratio;2 points;Question 24;The most common method of controlling inventory in a small business is the ________ system.Answer;floor sample;two-bin system;partial;visual;2 points;Question 25;Just-In-Time" inventory control techniques are most successful in what type of environment?Answer;Repetitive manufacturing operations where inventory levels are significant at the outset;Where product requirements are customized for each customer;Where a company changes suppliers regularly and those suppliers are independent of the manufacturer;Where inventory levels have been reduced to safety stock levels;2 points;Question 26;system enables business owners to track their inventories and to place orders with vendors quickly and with few errors by linking them to their vendors electronically.Answer;Electronic Data Processing (EDP);Electronic Fund Processing (EFP);Electronic Data Interchange (EDI);Enterprise Resource Planning (ERP);2 points;Question 27;Effective management of inventory begins with:Answer;developing an accurate sales forecast.;setting realistic inventory turnover objectives.;determining what level of safety stock to maintain.;establishing purchasing procedures.;2 points;Question 28;Employers can reduce employee theft through:Answer;careful screening of employees during hiring.;only hiring relatives and the friends of current employees.;the use of metal detectors and random strip searches of employees.;searching employees' lockers and cars during work hours.;2 points;Question 29;For most retailers and wholesalers, the investment in ________ is the largest capital outlay next to payroll.Answer;office equipment, computers, etc.;vehicles, automobiles and trucks;inventory;taxes and licensing fees;2 points;Question 30;The purpose of ABC inventory analysis is:Answer;to help retail stores control their inventories to prevent shoplifting and employee theft.;to save time by only inventorying those items that produce the majority of a firm's sales.;to focus inventory control efforts on items that account for the majority of sales.;a system to facilitate the computerization of a firm's perpetual inventory system.
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