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






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






3. 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






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






5. Constant vs variable - independent vs dependent






6. 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






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






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






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






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






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






12. Constant vs variable






13. 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






14. 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






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






16. 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






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






18. Have most complex and difficult inventory problems






19. Often everybody's concern - but nones responsibility






20. Usually a firm's largest expenditure






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






22. Internal vs external






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






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






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






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






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






28. Minimum rate of return expected on new investments






29. 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






30. Customers demand for finished goods






31. 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)






32. Single order vs repetitive order






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






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






35. 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






36. Display inventory carried to increase product visibility stimulate demand






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






38. 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






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






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






41. 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






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






43. Demands - replenishments - constraints - and costs






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






45. 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






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






47. 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






48. 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






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






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







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