Lesson 3.4.5

3.4.5 Making operational decisions: managing inventory and supply chains Quiz: AQA Business, Unit 4

20 questions

Written by Revision Ninja · Last reviewed 11 October 2026

In partnership with Revision Ninja

Lesson 3.4.5, Making operational decisions: managing inventory and supply chains: 20 multiple choice questions for the AQA Business (7132), Unit 4: Operational management, written with Revision Ninja.

Host it live on the board and students join with a game code on their own devices, or revise alone with Free Play. The answers are revealed in the game.

Host this setFree Play

The 20 questions

  1. Lead time is:

    • The time a product spends on a shelf before sale
    • The time taken to produce goods on the factory floor
    • The time between placing an order and receiving the goods
    • The time between delivery and the next customer order

  2. Buffer stock is:

    • Extra inventory held as a safety margin against unexpected demand or delays
    • Stock kept in a separate warehouse for emergencies only
    • Stock sold at a discount to clear inventory
    • The minimum stock permitted by a supplier's contract

  3. The re-order level is:

    • The quantity of stock ordered each time, regardless of stock level
    • The stock level at which a new order must be placed to avoid running out
    • The maximum stock a business can hold in its warehouse
    • The price per unit paid to a supplier for goods

  4. Producing to order means:

    • Producing goods based on forecasts of future demand alone
    • Making goods in large batches and storing them for future sales
    • Making goods only after a customer has placed an order for them
    • Producing goods only for export markets

  5. Outsourcing means:

    • Selling the business's assets to another company
    • Hiring full-time employees to carry out all production
    • Using an external supplier to carry out an activity the business previously did itself
    • Bringing an activity inside the business that a supplier previously did

  6. Part-time and temporary employees can help match supply to demand because they:

    • Remove the need for any staff training
    • Are always cheaper than any other form of labour in every case
    • Eliminate all employment law obligations
    • Allow labour to be scaled up or down as demand changes

  7. Re-order quantity refers to:

    • The stock level at which production stops
    • The total stock held by the business at year end
    • The amount of stock ordered each time a new order is placed
    • The number of suppliers a business uses in a year

  8. A business's average daily usage is 80 units, its lead time is 5 days and its buffer stock is 100 units. What is the re-order level?

    • 500 units
    • 400 units
    • 180 units
    • 100 units

  9. Daily usage is 50 units, the re-order level is 350 units and buffer stock is 100 units. What is the lead time?

    • 10 days
    • 5 days
    • 3.5 days
    • 7 days

  10. An inventory control chart shows stock falling below the re-order line before the next delivery arrives. What does this suggest?

    • The business is at risk of stockout unless buffer stock covers the shortfall
    • Demand has fallen to zero
    • The supplier has delivered early
    • The business has excess stock and should cancel future orders

  11. Which factors most influence the choice of supplier?

    • The number of employees in the supplier's marketing team
    • Reliability, price, quality and delivery speed
    • Whether the supplier has a website
    • The supplier's office colour and logo

  12. A business outsources its payroll to a specialist firm. What is the most likely benefit?

    • Removal of all legal responsibility for employment law compliance
    • Higher fixed costs due to a long-term contract
    • Full control over every payroll decision and timing
    • Lower fixed costs and access to specialist expertise without hiring full-time staff

  13. Annual demand is 12,000 units. Holding costs are high and each order carries a fixed fee. Which change to re-order quantities is most sensible?

    • Order in one large quantity once a year regardless of holding costs
    • Place no orders and rely on stock already held
    • Double the buffer stock to avoid any reordering
    • Order in smaller quantities more often, to reduce average holding costs

  14. A seasonal ice-cream producer hires temporary staff in the summer. Which principle does this illustrate?

    • Reducing buffer stock
    • Lean production with no workers
    • Vertical integration into retail
    • Matching labour supply to demand

  15. What is the main advantage of producing to order?

    • Guaranteed higher prices than any stock-based system
    • Lower inventory holding costs and less risk of unsold stock
    • Faster delivery than producing to stock in every case
    • No need for any production planning

  16. Evaluate: what is the strongest argument against outsourcing a key part of the supply chain?

    • Outsourcing always increases fixed costs with no benefit
    • Outsourcing means the business no longer has any customers
    • The business loses direct control over quality and delivery, creating risk if the outsourced supplier fails
    • Outsourcing is illegal for UK businesses

  17. Average daily usage is 60 units, the lead time is four days and buffer stock is 80 units, giving a re-order level of 320. If the supplier cuts lead time to two days, what re-order level is needed?

    • 240 units
    • 200 units
    • 120 units
    • 320 units

  18. A business cuts its buffer stock to save costs and then suffers stockouts. What is the best explanation?

    • Stockouts are caused by holding too much stock
    • Lower buffer stock leaves little margin for unexpected demand or late deliveries, so a shortage is more likely
    • Buffer stock only affects the price of goods
    • Buffer stock has no effect on stockouts because demand is constant

  19. A supplier charges 5 per unit with 5% of units defective, while another charges 5.50 with 1% defective. Which gives the lower cost per good unit?

    • The 5 per unit supplier, at about 5.50 per good unit
    • The 5.50 supplier, at about 5.45 per good unit
    • The 5.50 supplier, at about 5.56 per good unit
    • The 5 per unit supplier, at about 5.26 per good unit

  20. Why might a business choose to hold more inventory despite the cost?

    • Inventory removes the need for supplier relationships
    • Inventory has no cost in any business
    • High stock protects against supplier unreliability and demand spikes, reducing the cost of lost sales and stoppages
    • Holding more inventory always reduces storage costs

All AQA Business quizzes