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. 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






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






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






4. 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)






5. 1) minimize inventory investment 2) maximize customer service 3) assure efficient plant operation






6. Demands - replenishments - - constraints - and costs






7. 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






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






9. 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






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






11. 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






12. 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






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






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






15. Single order vs repetitive order






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






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






18. 1) stock of material on hand at a given time (tangible assets that can be seen - measured - and counted) 2) utilized assets waiting for sale of use






19. 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






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






21. Display inventory carried to increase product visibility stimulate demand






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






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






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






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






26. Capital costs - storage space costs - inventory service cost - inventory risk cost






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






28. Have most complex and difficult inventory problems






29. Associated insurance cost - associated taxes






30. 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)






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






32. Inventory partially completed finished products that are still in the production process; isolate the production departments from one another






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






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. Minimum rate of return expected on new investments






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






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






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






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






40. Constant vs variable - independent vs dependent






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






42. Customers demand for finished goods






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






44. Usually a firm's largest expenditure






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






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






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






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






50. Internal vs external