Test your basic knowledge |

Inventory Management

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Capital costs - storage space costs - inventory service cost - inventory risk cost






2. Gives firms a competitive advantage due to lower costs and greater flexibility






3. The cost associated with a foregone alternative use of the capital - that is - the benefits that could have been obtained from that alternative






4. Should be in charge of all materials-relatied functions including: purchasing - transportation - storage - production control - and inventory - ; they must be viewed on same level as finance - marketing - engineering - ext






5. Usually a firm's largest expenditure






6. Items purchased to be USED in the production process; they will be modified or transformed into the final product; isolate the supplier and the user






7. Perpetual vs periodic






8. Working stock - anticipation stock - safety stock - pipeline stock - decoupling stock - psychic stock






9. The cost of issuing a purchase order/placing an order if obtained externally - the cost of setting up production if made in house






10. Purchase economies - production economies - transportation economies - hedging against increasing materials cost - smooth production and stabilize manpower levels when seasonality is an issue






11. Run out of material or supplies - production stopping - deadlines not met






12. Are associated with the operation of an inventory system and result from action or inaction - they are the basic economics parameters to any inventory decision model (purchase cost - order set up cost - stock our cost - and holding cost)






13. Involves controlling the flow of materials into and out of a system - a big timing problem






14. As you move up in the supply chain...






15. A customers order cannot be met - backorder costs - present profit loss - future profit loss






16. Display inventory carried to increase product visibility stimulate demand






17. Cost of the facility - material handling (labor and energy) - maintenance cost - and some utility cost






18. Final product - available for storage - distribution - or sale; isolate the customer from the producer






19. The cost associated with a foregone alternative use of the capital - that is - the benefits that could have been obtained from that alternative - usually the largest component of the inventory carrying cost - usually set to the value of the firms






20. Demands - replenishments - constraints - and costs






21. Time factor - discontinuity factor - uncertainty factor - and economic factor






22. Single order vs repetitive order






23. Customers demand for finished goods






24. Units taken from inventory - can be categorized by: 1) size (magnitude/quality - constant vs variable and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






25. Those cost that vary with the amount of inventory in the short run






26. Often short on cash because what little they have they devote to growth






27. Internal vs external






28. One firms finished goods may be another firms supplies or raw materials






29. Repetiveness - source of supply - type of demand - type of lead time - type of inventory system






30. Fewer department conflicts - less sub optimization - consolidation of activities - single source of accountability






31. Inventory build up to cope with expected changes; reasons for carrying: seasonal surges - promotional items - scheduled stoppage - seasonal disruptions (weather - supply - ect) - other expected issues (possible labor shortages during contract n






32. Externally (aka supply line inventory)-orders place but not yet received (orders being processed and orders in transit) - internally-work in progress - reasons for carrying: time/distance - work in process inventory






33. Production does not need to be geared directly to this; it is not faced to adapt to the necessities of production






34. 1) difficulties in synchronizing supply and demand (supply and demand often differ in the rates at which they provide and require stock) 2) material-related operations take time (goods cannot be produced the instant demand occurs)






35. Often everybody's concern - but nones responsibility






36. Sacrificed in exchange for buying needed machines






37. The economic consequences of an internal or external shortage - vary greatly between items and customers - very difficult to estimate - most firms avoid messing with this by specifying customer service levels






38. The stock of materials on hand at a given time and the unutilized assets waiting for sale or use






39. As items are completed - they enter another pool-finihsed goods - this pool must be controlled with regard to external demand






40. The cost associated with the money tied up in inventory and the cost associated with maintaining it in storage - usually expressed as a percentage of items value - includes capital costs - storage space costs - inventory service costs and invento






41. Includes cost of obsolescence (equal to the original cost-salavage cost) - damage cost - and shrinkage (theft) cost






42. Minimum rate of return expected on new investments






43. Goods are purchased from suppliers and the first pool of inventory investment that need management forms - the quantity and variety of items in the pool should be times to meet the need for their use by the firm






44. Each pool requires synchronization of the rate of flow into and from it - no pool can be controlled without respect to the others - problems in one pool will effect all others - raises question of how much to order at any given time and when to pl






45. If the firm uses a warehouse or distributor centers - there must be additional pools of finished inventory






46. Limitations placed on inventory systems - ex: space constraints - capital - facility - equipment - personal - management policies and administrative decisions






47. Low unit cost - high inventory turnover - consistency of quality - favorable supplier relations - continuity of supply - these goals of inventory management are in many ways in direct conflict






48. Materials are used by manufacturing and fill a second pool of work in process - this pool must be managed in relation to the capacity of the facility






49. The cost associated with the money tied up in inventory and the cost associated with maintaining it in storage - usually expresses as a percentage of items value






50. Includes associated insurance cost (ex insurance for fire and theft) and associated taxes ( can vary substantially from location to location - as much as 0% to 20% of value of goods held in inventory)