5. Reducing setup time is important because it: A. Increases available capacity B. Increases flexibility to meet schedule changes C. Reduces inventory D. All of the above E. Only (A) and (C) above 6. The costs associated with carrying inventory include: A) Interest cost on capital tied up in inventory. B) Cost of storage C) Inventory insurance cost and inventory tax D) All of the above. E) Only (a) and (b) above 7. Independent demand inventory consists of: A) Inventory whose demand is derived from dependent demand items B) Inventory that is independent of any known rules of demand and supply C) Inventory whose demand is determined by the marketplace D) Inventory of parts and components required to produce the firm's finished products. 8. The decision whether to carry inventory or not essentially involves a trade-off between: A) the cost of ordering and inventory carrying, and the opportunity cost of lost sales due to stock-outs. B) Item cost and inventory carrying cost. C) Ordering cost and setup cost. D) Ordering cost and opportunity cost. 9. What is the impact of using a simple moving average method when actual demand trend is growing higher? A) If growth trend continues, the forecast average will always be below the actual demand. B) If growth trend continues, the forecast average will always be above the actual demand. C) If growth trend continues, the forecast average will be equal to the actual demand. D) If growth trend continues, the forecast demand will stay level. 10. The design and management of a string of p f processes beginning with suppliers through the production and distribution systems until delivery of goods and services to final customers is A) Quality function deployment B) Supply chain management C) Continuous improvement D) Just-in-time operations E) Lean thinking