NIOS Class 10 Logistics & Supply Chain Management Chapter 20 Inventory Management

NIOS Class 10 Logistics & Supply Chain Management Chapter 20 Inventory Management Solutions to each chapter is provided in the list so that you can easily browse through different chapters NIOS Class 10 Logistics & Supply Chain Management Chapter 20 Inventory Management and select need one. NIOS Class 10 Logistics & Supply Chain Management Chapter 20 Inventory Management Question Answers Download PDF. NIOS Study Material of Class 10 Logistics & Supply Chain Management Notes Paper 258.

NIOS Class 10 Logistics & Supply Chain Management Chapter 20 Inventory Management

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Also, you can read the NIOS book online in these sections Solutions by Expert Teachers as per National Institute of Open Schooling (NIOS) Book guidelines. These solutions are part of NIOS All Subject Solutions. Here we have given NIOS Class 10 Logistics & Supply Chain Management Chapter 20 Inventory Management, NIOS Secondary Course Logistics & Supply Chain Management Solutions for All Chapters, You can practice these here.

Inventory Management

Chapter: 20


1. The process of warehousing starts from warehousing till the final product is completed.

(A) True.

(B) False.

Ans: (A) True.

2. Expand FIFO – LIFO.

Ans: FIFO – First In First Out LIFO – Last In First Out.

3. Effective inventory management helps in enhancing the cash flow of the company.

(A) True.

(B) False.

Ans: (A) True.

4. Which are the below objectives of inventory management?

(A) Preventing Dead Stock.

(B) Optimising Storage Cost.

(C) Maintaining Sufficient Stock.

(D) All the above.

Ans:  (D) All the above.


1. There are ________ types in basic inventory management.

Ans: 3.

2. __________ is the automated and simplified version of the management types.

Ans: Barcode inventory management.

3. Expand RFID.

Ans: Radio frequency identification number.

4. Continuous inventory management is also called as__________.

Ans: Perpetual Inventory System.

5. Periodic Inventory Management is a manual process of inventory management.

(A) Yes. 

(B) No.

Ans: (A) Yes. 


1. Implementing a good inventory system helps you to check your stock at regular intervals.

(A) True.

(B) False.

Ans: (A) True.

2. __________ gives you the data, where to stock and how much to stock.

Ans: Tracking inventory.

3. Keeping reports of your inventory helps you in analysing the performance of your products.

(A) True.

(B) False.

Ans: (A) True.

4. finding the better performing product and stocks which helps in minimising the __________.

Ans: Holding and Handling cost.


1. Ordering costs include payroll taxes, benefits and the wages of the procurement department, labour costs etc.

(A) True. 

(B) False.

Ans: (A) True. 

2. Shortage costs are also known as __________.

Ans: stock-out costs.

3. Which of the below products are spoilage products?

(A) Food and beverages.

(B) Cosmetic products.

(C) Healthcare products.

(D) All the above.

Ans: (D) All the above.

4. __________ is the lesser-known aspect of inventory cost.

Ans: Inventory carrying cost.

5. Storage space costs are a part of __________.

Ans: Inventory holding cost.


1. Expand WMS.

Ans: warehouse management system.

2. Batch tracking is also called as __________.

Ans: Lot tracking.

3. Complete the formula Average Daily Unit Sales x __________) + Safety Stock = __________.

Ans: (Average Daily Unit Sales x Average Lead Time in days) + Safety Stock = Reorder Point.

4. Expand MOQ.

Ans: Minimum order quantities.

5. Carrying safety stock helps in.

(A) Protection against sudden demands.

(B) Compensation for inaccurate market forecasts.

(C) Preventing from out of stock.

(D) All the above.

Ans: (D) All the above.


1. Inventory analysis helps you in giving the data of the right amount of stock to be kept on hold by minimising the inventory cost.

(A) True.

(B) False.

Ans: (A) True.

2. When you avoid excess money flowing into inventory, you have an excessive amount to be used for __________.

Ans: Capital.

3. Customer satisfaction is attained by minimising stockouts and backorders.

(A) True.

(B) False.

Ans: (A) True.

4. When using inventory to build products for a special project, analysis of the inventory level is very crucial.

(A) True.

(B) False.

Ans: (A) True.

5. If you buy and store too many products in stock and not sold in the market quickly, it ends up in __________.

Ans: Storage costs. 


1. Expand COGS.

Ans: Cost of Goods Sold.

2. Inventory turnover is affected by __________ factors.

(A) 2

(B) 3

(C) 4

(D) 5

Ans: (A) 2

3. Sell through rate = __________.

Ans: (No.of sales/Stock on hand) x 100.

4. Any GMROI ratio below 1.0 means the business is not profitable and its losing invested money.

(A) True.

(B) False.

Ans: (B) False.

5. The main reasons for back order are.

(A) Not tracking the activities efficiently.

(B) Not re-ordering at the right time.

(C) Not buying the right amount of inventory.

(D) All the above.

Ans: (D) All the above.


1. __________ analysis is the most commonly used inventory technique.

Ans: ABC analysis.

2. Expand VED analysis.

Ans: vital, essential and desirable. 

3. __________ inventory is based on when the expiration date is moved first.

Ans: FIFO.

4. __________ is based on the sales and market forecasts of the company.

(A) Just-in-time.

(B) Economic Order Quantity.

(C) Material requirement planning.

(D) None of the above.

Ans: Economic Order Quantity.

5. SDE type of inventory analysis considers how scarce an item is and how easily you can acquire it.

(A) True.

(B) False.

Ans: (A) True.


1. Mention the objectives of Inventory Management.

Ans: The objective of inventory Management are mentioned below: 

(i) Preventing Dead Stock or Perish ability: With optimal inventory practices, you are able to reduce the wastage of goods from spoiling and not being able to use them in production and distribution.

(ii) Optimising Storage Cost: It helps in maintaining excessive stock getting into the warehouse, which helps in reducing the raw materials stored in the warehouse which makes you pay the additional warehouse charges.

(iii) Maintaining Sufficient Stock: When you have the data of the right amount of supply of raw materials, the flow of raw materials are smooth in the production department, where there will be no issues in the supply of raw materials. 

(iv) Enhancing Cash Flow: It has a great impact on the cash flow of the company. With effective inventory management, the cash flow of the company is maintained and regulated liquid cash for all operational activities is achieved.

(v) Reducing Inventories’ Cost Value: When you maintain the purchase of raw materials for your organisation regularly, the company may ask for discounts, which enables you to get the materials at a very reasonable cost.

2. What are the various types of Inventory?

Ans: The various types of Inventory are giving below:  

(i) Raw Materials: Raw materials consist of all the items that are processed to make the final product. In a cookie manufacturing company, the raw materials are items like milk, sugar, and flour that are used in the different stages of production. When we talk about raw materials, it is essential to understand that raw materials used by a manufacturing company can either be sourced from a supplier or be a by-product of a process. In our cookie manufacturing company, the raw materials will be mostly sourced from various suppliers. However, in a sugar manufacturing company, only the sugarcane is brought in from different farmers.

(ii) Work in Progress: When raw materials have been sent for processing but have not yet been approved as finished goods, this stage is known as work in progress. In a cookie manufacturing company, after the raw materials have been processed and the cookies have been moulded, they go for a quality check before they are passed for final packaging. All the cookies which are waiting for their quality check are considered work in progress. To put it in simple words, the work-in-progress category consists of all the items that have been processed but not sent for sale.

(iii) Finished Goods: Finished goods are the final items that are ready for sale in the market. These goods have passed through all stages of production and quality checking. So for the cookie manufacturer, the final packets of cookies that are sent to the market for selling after undergoing quality checks will be the finished goods. Raw materials, semi-finished goods, and finished goods are the three main categories of inventory that are accounted for in a company’s financial accounts. There are other types as well which are maintained as a precautionary measure or for some other specific purpose.

(iv) MRO Inventory: MRO stands for Maintenance Repairing and Operating supplies, this type of inventory is mostly relevant for manufacturing industries. MRO items are not accounted for as inventory items in books of accounts, however, they play a crucial role in the day-to-day working of an organisation. MRO supplies are used for the maintenance, repair, and upkeep of the machines, tools, and other equipment used in the production process. Some examples of MRO items are lubricants, coolants, uniforms and gloves, nuts, bolts, and screws.

(v) Buffer Inventory: In the manufacturing or trading business, fluctuations and market movements cannot always be predicted. Such changes can have a negative impact on the sales or production process, which can lead to out-of-stock situations. Buffer inventory attempts to compensate for this by following the adage that prevention is better than cure. Buffer inventory (also known as safety stock), consists of the items stored in the warehouse of a store or a factory to cushion the impact of unexpected shocks.

(vi) Decoupling Inventory: Most manufacturing is carried on by multiple machines. The output of one machine is fed into the next machine for further processing. However, the process only works smoothly if all the machines work in tandem. A breakdown in any of the machines can derail the entire process, which is when decoupling inventory comes into the picture. Decoupling inventory consists of items which are kept in reserve to be processed by another machine if the previous machine fails to produce its usual output.

(vii) Transit Inventory: Transit inventory refers to items that are being moved from one location to another, such as raw materials being transported to the factory by railway or finished goods being transported to the store by truck.

3. List out the needs for maintaining inventory.

Ans: The needs for maintaining inventory are given below: 

(i) Tracking Inventory: Implementing a good inventory management system helps you to keep track of stock at regular intervals and gives you control over the operations carried out. It gives you information on where to stock and how much to stock, to which warehouse you should move the goods, which helps you reduce operational costs and enables an  uninterrupted flow of goods and improved customer service.

(ii) Control Your Costs: Keeping reports of your inventory helps you in analysing the performance of your products which are doing good, which are not moving well, which are holding place for so long in inventory and so on. It reduces the operational and storage costs and also helps in identifying the right product to deliver in the market.

(iii) Improve Your Delivery: Late delivery is a serious issue when it comes to business which creates a bad impression on the company and may lead to loss of customers eventually. Proper Inventory Management Systems help in delivering the product to the customers on time.

(iv) Manage Planning and Forecasting: Inventory software helps in improving demand forecasting by analysing the data

and helps you in finding better-performing products and stocks which helps in minimising the holding and handling cost and improves the revenue. With the right planning, you are also able to deliver the product to customers on time.

(v) Reduce the Time for Managing Inventory: With good inventory management, you can reduce the time taken to keep track of all the products, analyse their performance regularly and how many you have in stock and how many orders you have currently to produce the product and also reduce the inventory recounts process.

4. Make a note of various costs associated with Inventory.

Ans: The various costs associated with Inventory are mentioned below: 

(i) Purchase Cost: Purchase Cost means the total cost associated with buying an item or service, inclusive of taxes, shipping costs, other fees, and unforeseen expenses.The actual cost of acquiring the inventory items from suppliers, including the cost of goods, shipping, and any import/export duties.

(ii) Taxes and Regulatory Compliance Costs: Taxes levied on inventory, such as property taxes, as well as costs associated with complying with regulations related to inventory management and reporting.

(iii) Opportunity Cost of Capital: This represents the cost of tying up capital in inventory rather than investing it elsewhere. It’s the return a company could have earned if the funds used for inventory were invested in alternative opportunities.

(iv) Inventory Holding or Storage Cost: This includes costs associated with physically holding inventory, such as depreciation of storage equipment, shelving, pallets, and racks.

(v) Inventory Carrying Costs: This is the lesser-known aspect of inventory cost. This cost requires a certain amount of calculations to understand the extent of its impact on your P&L statement. Inventory carrying costs refers to the amount of interest a business loses out on the unsold stock value lying in the warehouses.

5. Explain in detail about the Inventory Management Process.

Ans: Inventory management is the process of overseeing and controlling the flow of goods into and out of a company’s inventory. It involves managing the stock of raw materials, work-in-progress (WIP), and finished goods to ensure that the right products are available in the right quantities, at the right time, and in the right location.  Inventory management refers to the process of storing, ordering, and selling of goods and services. The discipline also involves the management of various supplies and processes. One of the most critical aspects of inventory management is managing the flow of raw materials from their procurement to finished products.

6. Explain the goals of Inventory Analysis.

Ans: The goals of Inventory Analysis are mentioned below: 

(i) Increase the Profit: By keeping the right amount of stock in the inventory will have a smooth flow in sales with an increased profit margin.

(ii) Decrease Storage and Related Expenses: By avoiding keeping more stock in inventory, you can reduce the storage costs and damage caused to the products by keeping them for a long time.

(iii) Finding Areas to Improve: Having a close watch on inventory helps in finding out the best selling product and the least selling and helps you to get an idea of which one and how much to stock and sell.

(iv) Stop Project Delays: When using inventory to build products for a special project, analysis of the inventory level is very crucial. You have to make sure you have enough material to complete the project on time.

(v) Diminish Wasted Inventory: If you buy and store too many products in stock, their value is reduced and if not sold in the market quickly, it ends up in storage costs for the product, which is a loss for the company. Inventory Analysis helps you to identify the correct amount of stock needed and plan accordingly.

7. Outline various types of Inventory Analysis.

Ans: The types of Inventory Analysis are mentioned below: 

(i) ABC Analysis: ABC analysis is the most commonly used inventory technique especially, for retail sectors which segregates the products based on the movement of goods and profit earnings into three categories: A, B, and C.

(ii) VED Analysis: This method is based on how important it is to have an inventory item in stock. Most of the manufacturing companies use this type of analysis to have the basic items in stock all the time to carry out the operations based on their important inventory. 

The analysis is based on:

(a) Vital: Inventory that must be in stock all the time.

(b) Essential: Have at least a small number of the items in inventory.

(c) Desirable: It is not always necessary to keep these items in stock.

8. List out various advantages & disadvantages of Inventory Management Systems.

Ans: The various advantages & disadvantages of Inventory Management systems are:

Advantages Disadvantages
It helps to maintain the right amount of stocksIncreased space is need to hold the inventory
It leads to a more organised warehouseHigh implementation costs
It saves time and moneyProduction problem

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