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NEW QUESTION 29
Which of the following best defines 'exponential moving average'?

A. A process by which the reorder of an item is triggered by the inventory level dropping to a predetermined level
B. A forecasting technique where the average is calculated by dividing the sum of the val-ues by the number of values
C. A forecasting technique where each demand is multiplied by a weighting factor
D. A process by which a decision is taken at a period end or review point to determine how much to reorder

Answer: C

Explanation:
An exponential moving average (EMA) is a type of moving average (MA) that places a greater weight and significance on the most recent data points. The exponential moving average is also referred to as the exponentially weighted moving average. An exponentially weighted moving average reacts more significantly to recent price changes than a simple moving average (SMA), which applies an equal weight to all observations in the period.
Reference:
LO 2, AC 2.3

NEW QUESTION 30
A supermarket calculates that the average holding cost for an item is $1.50 per cubic meter per day. A beer pallet which has volume of 0.5 cubic meter will be stored for 5 days. What is the holding cost of this beer pallet?

A. $4.50
B. $4.00
C. $3.75
D. $4.25

Answer: C

Explanation:
The holding cost per day of the beer pallet is equal to 1.50/2=0.75
The beer pallet is stored for 5 days, the total holding cost is: 0.75*5=3.75.
LO 2, AC 2.2

NEW QUESTION 31
Which of the following statements holds true about inventory holding costs?

A. They decline as the cost of the inventory item rises
B. They depend upon the opportunity cost of tying up funds and the average value of the stock holding
C. They always exceed total ordering costs
D. They are independent of the average stock level

Answer: B

Explanation:
Holding costs (carrying costs) are the costs associated with the storage and handling of physical stock. There are two different types of holding costs:
- Costs related to the value of the goods: financial costs (i.e. the interest on the working capital tied up in inventory, which may be the bank borrowing rate or the company's target for return on capital); cost of insurance; losses due to product deterioration; losses due to obsolescence and redundancy of inventory; losses due to theft, accidental damage etc.
- Costs related to the physical characteristics of the inventory include the following: storage space; power, heat and lighting of the store; movement equipment; labour costs; administration costs.
Reference:
LO 2, AC 2.2

NEW QUESTION 32
Which of the following can replace pallets as bases for unit loads but they require push pull acces-sories to retrieve or discharge unit load?

A. Skids
B. Shrink wraps
C. Post pallets
D. Slip sheets

Answer: D

Explanation:
The system of slip sheet load handling involves the use of a thin sheet of material, the slip sheet, as a base on which items are assembled as a unit load for handling, storage, and transport. The slip sheet is used in conjunction with a pallet, if desired, at certain stages in the distribution cycle. If all lift trucks in the cycle are equipped with the proper attachment, an appropriate slip sheet is the only material handling base required. Slip sheet requires special push pull accessories and usually use thin and wide forks.

Skids are generally described as single-deck pallets and do not have bottom flatted layer which makes them less bulky and cheaper than conventional pallets but also less universal in their use.

Shrink wrap, also referred to as shrink film or shrink wrap, is a versatile polymer material used for the packaging of finished goods. Heat is applied to the film - by either a conveyor heat tunnel or an electric or gas heat gun - which catalyzes the film to shrink tightly around the item placed within. This process results in a clear, durable barrier of protection around the product.
Post pallets have a simple metal structure with four uprights and substantial feat to take the load. These may be free standing, but many are designed for the feet to interlock with the posts of another post pallet so that the stack can be created.

Reference:
LO 1, AC 1.3