MCQ on Inventory Control and Pharmaceutical Supply Chain

🟢 Easy (1–20)

1. What does FIFO stand for in inventory control?
   A. First In, First Out ✅
   B. Fast In, Fast Out
   C. First In, Few Out
   D. Final In, Final Out
   Explanation: FIFO ensures that older stock is used or sold before newer stock, reducing expiry risk.
2. Which inventory system continuously tracks stock levels?
   A. Periodic System
   B. Perpetual System ✅
   C. Seasonal System
   D. Static System
   Explanation: The perpetual system updates inventory in real-time after each transaction.
3. What is the primary goal of inventory control?
   A. Increase purchases
   B. Minimize theft
   C. Maintain optimum inventory ✅
   D. Increase shelf life
   Explanation: Inventory control aims to maintain an ideal stock level, avoiding shortages or excess.
4. Which of the following is NOT a type of inventory?
   A. Raw materials
   B. Work in progress
   C. Finished goods
   D. Property tax ✅
   Explanation: Property tax is an expense, not a type of inventory.
5. ABC analysis is based on:
   A. Volume of items
   B. Weight of products
   C. Value of items ✅
   D. Size of inventory
   Explanation: ABC analysis categorizes inventory by its value contribution.
6. Which method is most suitable for high-value, low-quantity items?
   A. LIFO
   B. ABC analysis ✅
   C. HML analysis
   D. VED analysis
   Explanation: ABC analysis helps control expensive items efficiently.
7. Which of these is a stock-out cost?
   A. Ordering cost
   B. Carrying cost
   C. Lost sales ✅
   D. Insurance
   Explanation: Stock-outs can lead to missed sales opportunities.
8. VED analysis is used in pharmaceutical inventory to classify items based on:
   A. Expiry
   B. Price
   C. Criticality ✅
   D. Volume
   Explanation: VED = Vital, Essential, Desirable, based on necessity.
9. EOQ stands for:
   A. Effective Order Quantity
   B. Economic Order Quantity ✅
   C. Efficient Order Quotient
   D. Estimated Order Quantity
   Explanation: EOQ determines the optimal order quantity to minimize total inventory cost.
10. Lead time is:
    A. Time to transport goods
    B. Time to use goods
    C. Time between ordering and receiving ✅
    D. Time for expiry
    Explanation: Lead time is the delay from placing an order to receiving it.
11. Which of the following is not a function of supply chain management?
    A. Production
    B. Distribution
    C. Retail pricing ✅
    D. Warehousing
    Explanation: Retail pricing is a marketing function, not SCM.
12. Pharmaceutical supply chain ends with:
    A. Wholesaler
    B. Pharmacy
    C. Manufacturer
    D. Patient ✅
    Explanation: The patient is the final recipient in the supply chain.
13. Which is a major reason for cold chain management in pharmaceuticals?
    A. Storage cost
    B. Inventory loss
    C. Temperature-sensitive drugs ✅
    D. Barcode scanning
    Explanation: Some vaccines and biologics require strict temperature control.
14. LIFO method stands for:
    A. Less In, First Out
    B. Last In, First Out ✅
    C. Long Inventory, Fast Out
    D. Last Inventory, Final Out
    Explanation: LIFO means the most recent stock is used first.
15. Which item is most likely to be categorized as “Vital” in VED?
    A. Multivitamins
    B. Antacids
    C. Insulin ✅
    D. Shampoo
    Explanation: Insulin is life-saving and irreplaceable.
16. Buffer stock is maintained to:
    A. Increase capital
    B. Prevent overstocking
    C. Avoid stock-outs ✅
    D. Speed up expiry
    Explanation: Buffer stock handles unexpected demand or delays.
17. Which parameter is crucial for cold chain integrity?
    A. Bar code
    B. Refrigeration ✅
    C. Batch number
    D. Transport cost
    Explanation: Cold chain depends on consistent low temperature.
18. What is the full form of SCM?
    A. Sales and Customer Management
    B. Strategic Chain Management
    C. Supply Chain Management ✅
    D. Store Control Mechanism
    Explanation: SCM stands for Supply Chain Management.
19. Which factor affects inventory carrying cost?
    A. Retail pricing
    B. Product labeling
    C. Storage and insurance ✅
    D. Purchase discount
    Explanation: Storage, handling, and insurance contribute to carrying costs.
20. Which of the following drugs needs cold chain storage?
    A. Paracetamol
    B. Ciprofloxacin
    C. Insulin ✅
    D. Ranitidine
    Explanation: Insulin must be stored at 2–8°C.

🟡 Moderate (21–40)

21. Which is a key performance indicator in pharmaceutical supply chain?
    A. GDP
    B. On-time delivery rate ✅
    C. Marketing return
    D. Customer complaints
    Explanation: Timely delivery ensures drug availability.
22. Which model helps determine when to reorder?
    A. EOQ
    B. ABC
    C. Reorder level model ✅
    D. VED
    Explanation: Reorder level model indicates the trigger point for reordering.
23. Stock rotation helps to:
    A. Reduce lead time
    B. Maintain shelf order
    C. Prevent expiry ✅
    D. Increase demand
    Explanation: Rotation ensures older stock is used first.
24. Cold chain failure leads to:
    A. Drug discoloration
    B. Potency loss ✅
    C. Price drop
    D. Bar code errors
    Explanation: Improper storage can degrade temperature-sensitive products.
25. In EOQ model, total cost includes:
    A. Holding + Ordering cost ✅
    B. Ordering + Transport cost
    C. Purchase cost + Holding cost
    D. Transport + Labor
    Explanation: EOQ minimizes the sum of holding and ordering costs.
26. Which of the following can help monitor temperature-sensitive drugs?
    A. Barcodes
    B. RFID with sensors ✅
    C. Expiry dates
    D. Batch codes
    Explanation: RFID tags can track temperature along the supply chain.
27. Which analysis identifies fast-moving items?
    A. ABC
    B. FSN ✅
    C. VED
    D. XYZ
    Explanation: FSN = Fast, Slow, Non-moving classification.
28. Which cost is reduced using EOQ?
    A. Expiry cost
    B. Shortage cost
    C. Total inventory cost ✅
    D. Retail margin
    Explanation: EOQ minimizes total inventory cost.
29. Which step comes after warehousing in the supply chain?
    A. Manufacturing
    B. Distribution ✅
    C. Procurement
    D. Purchasing
    Explanation: After storage, goods are distributed to the next level.
30. Safety stock is kept to:
    A. Meet average demand
    B. Handle surplus supply
    C. Mitigate variability ✅
    D. Satisfy suppliers
    Explanation: Safety stock handles demand/supply fluctuations.
31. Which analysis is best combined with VED for healthcare?
    A. FSN
    B. HML
    C. ABC ✅
    D. XYZ
    Explanation: ABC-VED matrix combines value and criticality.
32. What does GDP stand for in pharma logistics?
    A. Good Distribution Practice ✅
    B. Gross Drug Profit
    C. General Drug Protocol
    D. General Distribution Process
    Explanation: GDP ensures proper distribution practices.
33. The bullwhip effect in pharma supply chain results in:
    A. Efficient stock levels
    B. Demand fluctuation magnification ✅
    C. Accurate forecasting
    D. Better profits
    Explanation: Small demand shifts at retail cause large upstream impacts.
34. Which of these contributes to stock obsolescence?
    A. Fast consumption
    B. High turnover
    C. Overstocking ✅
    D. Seasonal demand
    Explanation: Overstocking can lead to expiry and obsolescence.
35. Which is a computerized inventory control technique?
    A. Kanban
    B. SAP ERP ✅
    C. FIFO
    D. VED
    Explanation: SAP is an ERP software used in pharma inventory management.
36. Which is a drawback of periodic inventory systems?
    A. High accuracy
    B. Cost-efficient
    C. Delayed discrepancy detection ✅
    D. Requires software
    Explanation: Periodic systems detect issues only at review times.
37. Which process includes sourcing raw materials?
    A. Procurement ✅
    B. Logistics
    C. Manufacturing
    D. Distribution
    Explanation: Procurement is the purchase of goods and services.
38. Which of the following is NOT an inventory control technique?
    A. EOQ
    B. ABC
    C. CRM ✅
    D. FSN
    Explanation: CRM (Customer Relationship Management) is not related to inventory.
39. Batch number helps in:
    A. Identifying expiry date
    B. Ensuring GMP
    C. Tracing product history ✅
    D. Managing cold chain
    Explanation: Batch numbers allow traceability in recalls and quality checks.
40. Reverse logistics deals with:
    A. Supplier communication
    B. Backward flow of goods ✅
    C. Packaging
    D. Barcode generation
    Explanation: Reverse logistics includes returns, recalls, and disposal.

🔴 Hard (41–50)

41. XYZ analysis is based on:
    A. Criticality
    B. Value
    C. Consumption variability ✅
    D. Quantity
    Explanation: XYZ = High, moderate, low variability in consumption.
42. Which inventory model accounts for uncertain demand and lead time?
    A. Basic EOQ
    B. Newsvendor Model ✅
    C. Reorder point
    D. FSN
    Explanation: Newsvendor Model handles single-period, uncertain demand.
43. Serialization in pharmaceuticals helps in:
    A. Reorder timing
    B. Theft prevention
    C. Traceability and anti-counterfeiting ✅
    D. Pricing strategy
    Explanation: Serialization ensures traceability from manufacturer to consumer.
44. GAMP stands for:
    A. Good Automated Manufacturing Practice ✅
    B. General Analytical Monitoring Procedure
    C. GMP Automation Manual Practice
    D. Global Anti-Microbials Policy
    Explanation: GAMP guides validation of automated pharma systems.
45. Kanban system is used to:
    A. Store cold chain drugs
    B. Monitor expiry
    C. Control inventory flow ✅
    D. Enhance branding
    Explanation: Kanban is a visual workflow management tool.
46. Which of these is a challenge in global pharma supply chain?
    A. Demand forecasting
    B. Counterfeit products ✅
    C. Retailer complaints
    D. Barcoding
    Explanation: Counterfeit drugs are a major global concern.
47. Inventory turnover ratio indicates:
    A. Stock diversity
    B. Obsolescence
    C. Number of times stock is used/replaced ✅
    D. Wastage rate
    Explanation: High ratio means efficient inventory usage.
48. Which parameter is crucial in real-time inventory monitoring?
    A. Manual registers
    B. ERP integration ✅
    C. Monthly audits
    D. Batch printing
    Explanation: ERP allows live inventory tracking.
49. Which inventory model is best for slow-moving items?
    A. EOQ
    B. FSN
    C. Min-max system ✅
    D. FIFO
    Explanation: Min-max sets limits to control rarely used items.
50. Which legislation in the EU enforces drug traceability?
    A. HIPAA
    B. MDR
    C. FMD ✅
    D. USP
    Explanation: Falsified Medicines Directive (FMD) ensures traceability and safety.