Important MCQs and FAQs on VED Analysis
Inventory management is one of the most important parts of any business, factory, or hospital. A good inventory system saves money, reduces wastage, and ensures that important items are always available.
One of the best methods of inventory control is VED Analysis. It is widely asked in competitive exams, management exams, hospital administration, supply chain exams, and interviews across the world.
20 Most Important MCQ on VED Analysis
Multiple Choice Questions (MCQs)
1. VED in VED Analysis stands for:
A) Value, Essential, Demand
B) Vital, Essential, Desirable
C) Very Essential Demand
D) Variable, Economic, Demand
Answer: B) Vital, Essential, Desirable
Explanation: VED is a classification of inventory items into Vital, Essential, and Desirable.
2. The main purpose of VED Analysis is:
A) To calculate the value of stock
B) To classify items by their importance
C) To find reorder quantity
D) To reduce transport cost
Answer: B) To classify items by their importance
Explanation: VED focuses on how important an item is for operations.
3. Vital items are those:
A) Which can be delayed in supply
B) Without which work stops immediately
C) That are luxury items
D) Used occasionally only
Answer: B) Without which work stops immediately
Explanation: Vital items are the most critical for operations.
4. Which of these is an example of a Vital item in a hospital?
A) Vitamin supplements
B) Antibiotics
C) Life-saving drugs
D) Stationery items
Answer: C) Life-saving drugs
5. Essential items are:
A) Important, but not as critical as Vital
B) Never needed
C) Used for decoration only
D) Very costly always
Answer: A) Important, but not as critical as Vital
6. Desirable items are:
A) Needed for work to continue
B) Not important for daily operations
C) Always out of stock
D) Equal to Vital items
Answer: B) Not important for daily operations
7. VED analysis is most commonly used in:
A) Hospitals and healthcare
B) Agriculture only
C) Textile fashion only
D) Banking
Answer: A) Hospitals and healthcare
8. Stock control priority is highest for:
A) Essential items
B) Desirable items
C) Vital items
D) All items equally
Answer: C) Vital items
9. In VED analysis, Essential items should be:
A) Always ignored
B) Controlled carefully but not as strictly as Vital
C) Not purchased at all
D) Treated like Desirable items
Answer: B) Controlled carefully but not as strictly as Vital
10. Example of Desirable item in an office is:
A) Main raw material
B) Stationery decoration
C) Spare machine part
D) Safety equipment
Answer: B) Stationery decoration
11. VED analysis is based on:
A) Cost of item
B) Demand of item
C) Criticality/importance of item
D) Supplier location
Answer: C) Criticality/importance of item
12. Which analysis is value-based, not importance-based?
A) VED Analysis
B) ABC Analysis
C) HML Analysis
D) SDE Analysis
Answer: B) ABC Analysis
13. Which type of analysis is best for hospital drug management?
A) VED
B) EOQ
C) FSN
D) XYZ
Answer: A) VED
14. Which of these can be called Essential in a factory?
A) Decorative items
B) Key spare parts of machines
C) Main raw material
D) Luxury furniture
Answer: B) Key spare parts of machines
15. If budget is limited, which category can be reduced first?
A) Vital
B) Essential
C) Desirable
D) None
Answer: C) Desirable
16. Vital items require:
A) Very strict control
B) No control
C) Minimal supervision
D) Random checking
Answer: A) Very strict control
17. Which is not a feature of VED analysis?
A) Classifies based on importance
B) Ensures availability of critical items
C) Reduces wastage
D) Measures unit price of items
Answer: D) Measures unit price of items
18. VED Analysis is especially useful when:
A) All items have same value
B) Some items are critical, others are not
C) No budget problem exists
D) Company deals in services only
Answer: B) Some items are critical, others are not
19. Desirable items can be procured:
A) Anytime without urgency
B) Always urgently
C) Never procured
D) Only if they are expensive
Answer: A) Anytime without urgency
20. The main benefit of VED Analysis is:
A) To stop purchase of all items
B) To reduce importance of costly items
C) To set priority in inventory control
D) To only calculate profit
Answer: C) To set priority in inventory control
Important FAQs on VED Analysis
Q1. What is VED Analysis in simple words?
Answer: VED Analysis is a method to classify inventory items into three groups – Vital, Essential, and Desirable – based on how important they are for work.
Q2. Why is VED Analysis important?
Answer: It ensures that the most important items (Vital) never go out of stock, helps save money, and gives clear priorities in inventory control.
Q3. What does VED stand for?
Answer: VED = Vital, Essential, Desirable.
Q4. Where is VED Analysis most used?
Answer: Mostly in hospitals, healthcare, and industries where availability of critical items is very important.
Q5. What is the difference between Vital and Essential items?
Answer: Vital items are absolutely necessary and without them work stops immediately. Essential items are also important but work can continue for a short time without them.
Q6. Can Desirable items be ignored?
Answer: Yes, if the budget is tight, Desirable items can be kept low in stock because they are not urgent for work.
Q7. How does VED Analysis save money?
Answer: By focusing resources and strict control only on Vital and Essential items, and not overspending on Desirable items.
Q8. Is VED Analysis value-based?
Answer: No, VED is importance-based. Value-based classification is done by ABC Analysis.
Q9. Which items get top priority in VED?
Answer: Vital items.
Q10. Example of Vital item in a hospital?
Answer: Life-saving drugs like adrenaline, insulin, or oxygen cylinders.
Q11. Example of Essential item in a factory?
Answer: Important machine spare parts.
Q12. Example of Desirable item in an office?
Answer: Decorative stationery or extra furniture.
Q13. How is VED different from ABC Analysis?
Answer: VED is based on importance of items, while ABC is based on value of items.
Q14. What happens if Vital items are out of stock?
Answer: Work stops immediately, which can cause loss, delay, or even risk to life (in hospitals).
Q15. Do Essential items need strict control?
Answer: Yes, but not as strict as Vital.
Q16. Do Desirable items need stock records?
Answer: Yes, but they can be managed with flexible control.
Q17. Is VED Analysis useful only in hospitals?
Answer: No, it is useful in all industries where priority of items matters.
Q18. What is the main advantage of VED?
Answer: It helps set clear priority in inventory control and avoids shortages of important items.
Q19. Which category can be reduced first if budget is limited?
Answer: Desirable items.
Q20. Why do exams ask about VED Analysis?
Answer: Because it is a fundamental and practical method of inventory management, useful in healthcare, manufacturing, and supply chain management.
Short Notes
- VED Analysis = Vital, Essential, Desirable.
- It is a method to control stock based on importance.
- Vital → Always in stock.
- Essential → Should usually be available.
- Desirable → Stock if budget allows.
- Very useful in hospitals, factories, and services.
- Most asked topic in inventory management exams worldwide.
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