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






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






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






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






5. 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)






6. Often everybody's concern - but nones responsibility






7. Demands - replenishments - constraints - and costs






8. Display inventory carried to increase product visibility stimulate demand






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






10. Constant vs variable - independent vs dependent






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






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






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






14. Usually a firm's largest expenditure






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






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






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






18. 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






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






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






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






23. 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






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






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






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






27. 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






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






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






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






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






32. Sacrificed in exchange for buying needed machines






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






34. Associated insurance cost - associated taxes






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






36. 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






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






38. Constant vs variable






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






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






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






42. 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






43. 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






44. 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






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






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






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






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






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






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