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If demand for an item is normally distributed, we plan for demand to be twice the average demand and carry 2 standard deviations worth of safety stock inventory.

A) True
B) False

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Firms keep supplies of inventory for which of the following reasons?


A) To maintain dependence of operations
B) To provide a feeling of security for the workforce
C) To meet variation in product demand
D) To hedge against wage increases
E) In case the supplier changes the design

F) A) and B)
G) None of the above

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Shortage costs are precise and easy to measure.

A) True
B) False

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Which of the following is not one of the categories of manufacturing inventory?


A) Raw materials
B) Finished products
C) Component parts
D) Just-in-time
E) Supplies

F) B) and E)
G) C) and D)

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