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Test your basic knowledge |
Inventory Management
Start Test
Study First
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
Material costs
Purchase costs
Contraints
Major components of inventory carrying cost
2. Gives firms a competitive advantage due to lower costs and greater flexibility
Responsibility
Inventory management
Storage space costs
Less inventory
3. The cost associated with a foregone alternative use of the capital - that is - the benefits that could have been obtained from that alternative
Goals of inventory management
Capital cost
Classification of Inventory item
Finished Goods Inventory
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
How are inventory problems classified
Capital cost
Inventory/materials manager
Onventory management
5. Usually a firm's largest expenditure
Reasons why inventory exists
Material costs
Repetiveness
Classification of Inventory item
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
Storage space
Raw Materials Inventory
Time Factor
Stock out costs
7. Perpetual vs periodic
Inventory
Type of inventory system
The categorization of inventory by the purpose that it serves
Economic Factors
8. Working stock - anticipation stock - safety stock - pipeline stock - decoupling stock - psychic stock
Costs
Inventory service cost
The categorization of inventory by the purpose that it serves
Major components of inventory carrying cost
9. The cost of issuing a purchase order/placing an order if obtained externally - the cost of setting up production if made in house
Order cost or set up cost
Time Factor
Contraints
Type of inventory system
10. Purchase economies - production economies - transportation economies - hedging against increasing materials cost - smooth production and stabilize manpower levels when seasonality is an issue
Capital costs (opportunity costs)
Inventory risk cost
Economic Factors
External shortage
11. Run out of material or supplies - production stopping - deadlines not met
Reasons why inventory exists
Internal shortage
Inventory risk cost
Problems become more complex
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)
Anticipation stock (seasonal stock)
Replenishments
Costs
Internal shortage
13. Involves controlling the flow of materials into and out of a system - a big timing problem
Properties of inventory
Inventory management
Source of supply
Reasons why inventory exists
14. As you move up in the supply chain...
Decoupling stock
Problems become more complex
Safety stock (buffer stock)
Inventory risk cost
15. A customers order cannot be met - backorder costs - present profit loss - future profit loss
Purchase costs
Type of lead time
Material costs
External shortage
16. Display inventory carried to increase product visibility stimulate demand
Psychic stock
Onventory management
Storage space costs
Problems become more complex
17. Cost of the facility - material handling (labor and energy) - maintenance cost - and some utility cost
Goals of inventory management
Supplies inventory
Storage space costs
Demands
18. Final product - available for storage - distribution - or sale; isolate the customer from the producer
Inventory management
Goals of inventory management
Finished Goods Inventory
External shortage
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
Inventory risk cost
Capital costs (opportunity costs)
Inventory holding costs
Sub goals of inventory management
20. Demands - replenishments - constraints - and costs
External shortage
Major properties of inventory
Major components of inventory carrying cost
Responsibility
21. Time factor - discontinuity factor - uncertainty factor - and economic factor
Consumption
Responsibility
Psychic stock
The categorization of inventory by reasons for its existence
22. Single order vs repetitive order
Raw Materials Inventory
Repetiveness
Different departments in a firm
Types of inventory
23. Customers demand for finished goods
Driving force behind the flow
Raw Materials Inventory
Material costs
Internal shortage
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
Demands
Uncertainty Factors
Retailers - wholesalers - and distributors
Time Factor
25. Those cost that vary with the amount of inventory in the short run
Storage space
Onventory management
Anticipation stock (seasonal stock)
Time Factor
26. Often short on cash because what little they have they devote to growth
Capital costs (opportunity costs)
Inventory service cost
Growing companies
In-Proccess Goods
27. Internal vs external
Basic types of inventory
Material costs
Repetiveness
Source of supply
28. One firms finished goods may be another firms supplies or raw materials
Classification of Inventory item
Type of lead time
Hurdle rate
Inventory service cost
29. Repetiveness - source of supply - type of demand - type of lead time - type of inventory system
Classifying inventory problems
Inventory risk cost
Functional classifications
Responsibility
30. Fewer department conflicts - less sub optimization - consolidation of activities - single source of accountability
Major properties of inventory
Repetiveness
Benefits of inventory/material manager
Third phase
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
Type of inventory system
Anticipation stock (seasonal stock)
External shortage
Inventory risk cost
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
Economic Factors
Inventory risk cost
Demands
Pipeline stock
33. Production does not need to be geared directly to this; it is not faced to adapt to the necessities of production
Inventory
Pipeline stock
Consumption
Capital cost
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)
Economic Factors
Reasons why inventory exists
Sub goals of inventory management
Stock out costs
35. Often everybody's concern - but nones responsibility
The categorization of inventory by the purpose that it serves
Types of inventory costs
Storage space costs
Onventory management
36. Sacrificed in exchange for buying needed machines
Purchasing discounts
Goals of inventory management
Inventory risk cost
Psychic stock
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
Stock out costs
Manufacturers
Responsibility
Classification of Inventory item
38. The stock of materials on hand at a given time and the unutilized assets waiting for sale or use
Inventory management
Major components of inventory carrying cost
Sub goals of inventory management
Problems become more complex
39. As items are completed - they enter another pool-finihsed goods - this pool must be controlled with regard to external demand
Third phase
How are inventory problems classified
Additional phases
Economic Factors
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
Inventory holding costs
Inventory service cost
Types of inventory costs
Additional phases
41. Includes cost of obsolescence (equal to the original cost-salavage cost) - damage cost - and shrinkage (theft) cost
How are inventory problems classified
Inventory risk cost
Anticipation stock (seasonal stock)
Functional factors to explain why inventory exists
42. Minimum rate of return expected on new investments
Inventory/materials manager
Inventory holding costs
Hurdle rate
Growing companies
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
Initial phase of inventory flow
Major properties of inventory
Properties of inventory
Costs
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
Inventory flow
Different departments in a firm
Order cost or set up cost
Growing companies
45. If the firm uses a warehouse or distributor centers - there must be additional pools of finished inventory
Additional phases
Source of supply
Finished Goods Inventory
Properties of inventory
46. Limitations placed on inventory systems - ex: space constraints - capital - facility - equipment - personal - management policies and administrative decisions
Benefits of inventory/material manager
Classifying inventory problems
Contraints
Safety stock (buffer stock)
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
Sub goals of inventory management
Demands
The categorization of inventory by the purpose that it serves
Anticipation stock (seasonal stock)
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
Supplies inventory
Second phase
Major components of inventory carrying cost
Different departments in a firm
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
Additional phases
Type of demand
Inventory carrying cost
In-Proccess Goods
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)
Onventory management
Less inventory
Inventory service cost
Contraints