INDIAN INSTITUTE OF MATERIALS MANAGEMENT
Post Graduate Diploma in Materials Management
Graduate Diploma in Materials Management.
PAPER No. 10
INVENTORY MANAGEMENT
Date 14.12.2017 Max. Marks :100
Time 10.00a.m. to 1.00 p.m. Duration 3 Hrs.
Instructions:
1. The question paper is in three parts B C.
2. Part A is compulsory. Each question carries one mark. Total 32 Marks
3. In Part answer 3 questions out of 5. Each question carries 16 marks.Total 48 Marks
4. Part C is a case study with sub questions and it is compulsory. It carries 20 marks.
5. Use of calculator is allowed wherever necessary.
6. Graph sheets can be used wherever necessary.
Part A (compulsory) 32 marks
(Attempt all questions each question carries 1 mark)
Q.1 State whether the following statements are True or False. 8 marks
1.1. Higher the inventory, lower the inventory carrying cost.
1.2. VMI concept reduces inventory holding cost.
1.3. Safety stock is dependent on lead time consumption.
1.4. The items under analysis are classified based on their "Annual Inventory Turnover".
1.5.Inventory carrying cost is inclusive of warehousing cost.
1.6.Perpetual Stock verification is an important warehousing activity.
1.7.MRO is an finished product inventory.
1.8.EOQ inventory is best suited for ordering seasonal gods.
Q.2. Fill in the blanks. 8 marks
2.1. All expenditures associated with holding the inventory is called as
2.2. Analysis is based highest stocked item in terms of stock value.
2.3. In FIFO inventory valuation system, units that are received the entity will be the
ones to be issued to production.
Dec-2017
2.4. Economic order quantity is the order quantity that the total inventory
holding costs and costs.
2.5. Inventory of materials, products and goods that are
considered to be the portion of a business's assets/balance sheet.
2.6. Stock-out Costs is the cost associated with the caused by the the
inventory..
2.7. Suppliers lead time is the time it takes the the to process and supply
the ordered units.
2.8. Reorder level/ Reorder point is the inventory level at which a company would place a

Q.3. Expand the following 8 marks
3.1. ERP 3.2. OEM 3.3.GST 3.4.VED
3.5. PERT 3.6. GOLF 3.7. GRN 3.8.JIT
Q.4. Match A and B 8 marks
A B
4A.1) HAZMAT
4B.1) Inventory accounting system
4A.2) ABC analysis
4B.2) Safety stock
4A.3) Material handling
4B.3) Unit load
4A.4) Weighted average price
4B.4) Determine requirements
4A.5) Dead weight principle
4B.5) Codification
4A.6) Variety Reduction
4B.6) Selective inventory control
4A.7) Demand forecasting method
4B.7) Container
4A.8) Lead time consumption
4B.8) Hazardous materials
PART B
Write any three of the following questions 16 marks each (48 Marks)
Q.5 How do you standardise the inventory of your organization what is the role of inventory coding
system for standardization?
Q.6 When inventory (materials) is located in multiple locations warehouses how do you control
movement of materials
Q.7 A)Define W I P Inventory? Explain factors influencing W IP inventory and how you control W IP?
Q.7.B) Explain in detail the factors which influence in determining reorder level?
Q.8.A) Explain the steps you take to have a successful Vendor Managed Inventory Program
Q.8.B) What is general classification Functional characteristics of spare part inventories?
Q.9 Answer any four of the following:
Write Short Notes on:
9.A) VED PQR Classification
9.B) Economic Ordering Quantity
9.C) Necessity of disposal of Surplus Inventory
9.D) Inventory forecasting
9.E) Two bin system
9.F) Forward buying
PART C
Q. 10 compulsory (20 marks)
A chemical company produces sodium bisulfate in 100 pound bags. Demand for the product is 20 tonsper day. The capacity for production is 50 tons per day. Setup cost is and storage and handling costs are per ton per year. The firm operates 200 days per year.
(Note: 1 ton 2,000 pounds)
Answer the following questions.
10.A) What is the annual demand in tons?
10.B) How many bags per manufacturing run are optimal?
10.C) What is the average inventory in bags for the optimal run size?
10.D) What is the manufacturing run time?
10.E) What is the pure consumption time?