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






2. 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






3. Supplies - raw materials - in-processed goods - finished goods






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






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






6. 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






7. 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






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






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






10. Allows one part of the system to be isolated from the next






11. 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)






12. 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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






13. Constant vs variable






14. Often divided up over all departments each with its own agenda: purchasing-raw materials and purchased items - manufacturing-work in progress - marketing-finished goods and distribution - it is usually best to give responsibility for all inventory






15. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






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






19. 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






20. Perpetual vs periodic






21. 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






22. Usually a firm's largest expenditure






23. Demands - replenishments - constraints - and costs






24. 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)






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






26. Often everybody's concern - but nones responsibility






27. Customers demand for finished goods






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






29. 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






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






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






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






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






34. 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






35. Internal vs external






36. Supplies - raw materials - in process goods - and finished goods






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






38. Sacrificed in exchange for buying needed machines






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






40. Constant vs variable - independent vs dependent






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






42. 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






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






44. Display inventory carried to increase product visibility stimulate demand






45. Associated insurance cost - associated taxes






46. 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)






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






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






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






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