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






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






3. Protection from the unexpected (forecast errors - break downs - strikes - disasters)






4. Often a lot of conflict when it comes to inventory decisions - sub optimization problems (managers only looking out for their own departments)






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






6. Demands - replenishments - - constraints - and costs






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






8. Hold only finished goods inventories/supplies - they have inventory problems confined to supplies and finished goods






9. Items consumes in the normal functioning of a firm that are NOT part of the final product; ex: pencils - light bulbs - drill bits - paper






10. Units put into inventory - can be classified by: size - pattern - lead time (time between order and addition to inventory - constant vs variable)






11. 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






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






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






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






15. Balance is key - concentration may be on one objective at certain times and on another at other times depending on needs of the firm - company policy should emphasize the need to focus on the total cost to the firm - bad idea to have lots of cash






16. Repetiveness - source of supply - type of demand - type of lead time - type of inventory






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






18. 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)






19. 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






20. Display inventory carried to increase product visibility stimulate demand






21. 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






22. Often everybody's concern - but nones responsibility






23. Perpetual vs periodic






24. It takes time to make a product - but consumers want them on demand






25. 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






26. 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






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






28. Usually a firm's largest expenditure






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






30. Allows freedom of operation for members of the supply chain; allows the treatment of various dependent operations (ex: retailing - warehousing - manufacturing - and purchasing) in an independent and economical manor






31. Time factor - discontinuity factor - uncertainty factor - economy factor






32. Cost of obsolescence - damage cost - shrinkage (theft) cost






33. Customers demand for finished goods






34. Demands - replenishments - constraints - and costs






35. Inventory held in advance of requirements - reasons for carrying: economies of scale (or batching economies) - price (quantity) discounts - transportation rates - production economies






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






37. Purchase - oder cost or set up cost - stock out cost - and inventory holding costs (aka inventory carrying costs)






38. Constant vs variable






39. 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






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






41. The cost for the item as it is laced in inventory - unit purchase cost (if obtained externally and includes delivery and transportation costs) - unit production cost (if made in house and includes labor - material and overhead costs)






42. 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






43. Inventory held in reserve to protect against uncertainty - reasons for carrying: uncertainty around customer demand - delays or disruptions in supply






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






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






46. Sacrificed in exchange for buying needed machines






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






48. What purpose does inventory serve? working stock - anticipation stock (seasonal stock) - safety (buffer) stock - pipeline stock - decoupling stock - psychic stock






49. 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






50. 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