SELECT BUSINESS AND TECHNOLOGY COLLEGE

DEPARTMENT OF MANAGEMENT

Material management individual assignment

Name: Simegn Chane Tadesse

ID NO 5933/12
Part I. True or False

Write “True” if the statement is correct and “False” if it is incorrect in the space provided

1. Material management is directly responsible for insuring that the product can technically
flow through the conversion process as planned.

Answer: - True

2. Organization must not be an end in itself but a means to the end of business performance.

Answer: - True

3. Delphi technique of demand forecasting reduces losses resulting from group process.

Answer: - True

4. Fob destination is better when buyer wants to have a control of both incoming and
outgoing shipments.

Answer: - False

5. Inventory is an idle resource that possesses economic value.

Answer:-True

6. Organizing materials management as a prime corporate function is particularly evident in

centralized business.

Answer: - True

7. The labor relations climate within a firm can influence its make or by decision

Answer: - True

Part II. Multiple choices

Choose the correct answer among the given alternatives and write the letter of your choice
in the space provided.

1. One of the following is not an operating objective of material management

A. Improving customer service at lower cost

B. Eliminating duplication of efforts

C. Improved acquisition of material

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 D. Effective utilization of the company’s prime assets

Answer: - B

2. Which of the following is not an advantage of decentralized purchasing?

A. Fast decision and allocation

B. Better overall stock management and material utilization

C. Better local need satisfaction

D. Batter transformation cost

Answer: - B

3. The starting point of the master plan for plant operation is:-

A. Product development

B. Industrial engineering

C. System analysis

D. Marketing

Answer: - C

4. FOB shipping refers to:-

A. The transfer of ownership of materials from sellers to buyers at the seller’s plant

B. The transfer of ownership of materials from seller to buyer at the buyer place

C. The transfer of ownership of materials from sellers to buyers at the port

D. The transfer of materials from seller to buyer in transit.

Answer: - D

5. One of the following refers to reduction of price to various classes of buyers and
distributions to compensate them for performing certain marketing functions for the
original seller of the product

A. Cash discount

B. Quantity discount

C. Trade discount

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 D. Seasonal discount

Answer: - C

6. In which demand forecasting method, is the demand forecast for the next period equals to
the demand for the current period?

A. Delphi forecasting method

B. Naïve forecasting method

C. Expert opinion method

D. Causal forecasting method

Answer: - B

7. When the inventory is classified according to its scarcity or availability, the analysis is
referred to as--------------------

A. VED analysis

B. HML analysis

C. ABC analysis

D. SDE analysis

Answer: - D

8. One of the following is not a factor that influence the material manager’s time allocation
in to the three areas of responsibility

A. Size of a business

B. Sophistication of management

C. Complexity of activities

D. None of the above

Answer: - D

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Part III. Short answer

Give short and brief answer for the following question in the space provided

1. Mention the factors that contributed to the development of integrated material management
concept

 Procuring better value

 Obtaining better yield
 Reducing investments in stock through Inventory control and material flow.
 Better Co-Ordination
 Improved Performance
2. Traditionally material management is divided in to three organizational areas. What are they?

 Planning
 organizing and
 controlling
3. State the major causes of forecast inaccuracy

 Data misinterpretation and lack of data entry standards

 Lack of communication with other departments
 Lack of Accountability
 Being Too Focused on Goals Instead of Reality

4. What does stock out and backorder refers to?

Out of stock means that a product does not currently have any inventory available and does not
have a date for resupply, while ‘backordered’ implies there is a determined date for products to
arrive.

Backordering refers to the order of a product which is out of stock currently. The product could
either be unavailable in the company’s inventory or is under production.

Part IV. Workout

1. Consider a large firm organization engaged in producing barely. The organization feels that
the demand for its product -barely is dependent or related to the number. of cans of beer of 1
liter consumed every year in a certain locality. To establish the demand forecast for its
product, the organization has collected the following historical data of hectares of land that
had been sawn & the number of quintals of barely harvested.

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 Solution
The first step is regression analysis is to identity the dependent and independent variables
usually denoted by x and y respectively. In this illustration the dependent variable is barely
and the independent variable is beer.

Bear (x) Barley (y) X2 xy

36 57 1296 2052
26 30 676 780
12 28 144 336
40 48 1600 1920
24 36 576 864
18 30 324 540
30 38 900 1140
30 46 900 1380
14 16 196 224
34 42 1156 1428
∑ ∑ ∑ ∑

∑
x = = 264/10 = 26.4

Y ∑ = 37.1

b ∑ – (nxy)/∑

b= 10,664- 10(26.4)(37.1)/ 7768-10(26.4)2

b= 10,664-9794.4/7768-6969.6= 869.6/798.4= 1.0892

b= 1.0892

a= y-b x

= 37.1 – 1.0892(26.4)= 8.346

a= 8.346

The demand for barley is = 1.0892(48,000)+ 8.346= 52.3 tons of quintals is demanded for the
coming year

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