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






2. Constant vs variable






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






4. 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






5. 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)






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






7. 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






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






9. 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






10. 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)






11. Demands - replenishments - constraints - and costs






12. Sacrificed in exchange for buying needed machines






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






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






15. 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






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






17. Purchase economies - production economies - transportation economies - hedging against increasing materials cost - smooth production and stabilize manpower levels when seasonality is an issue






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






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






20. Internal vs external






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






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






23. Associated insurance cost - associated taxes






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






25. 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






26. Perpetual vs periodic






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






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






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






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






31. 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






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






33. 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)






34. Have most complex and difficult inventory problems






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






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






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






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






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






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






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






42. Demands - replenishments - - constraints - and costs






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






44. 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






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






46. 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






47. 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)






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






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






50. Usually a firm's largest expenditure