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






2. Internal vs external






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






4. 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






5. 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






6. Hold only finished goods inventories/supplies - they have inventory problems confined to supplies and finished goods






7. 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






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






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






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






11. Sacrificed in exchange for buying needed machines






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






13. Perpetual vs periodic






14. Usually a firm's largest expenditure






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






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






17. Constant vs variable






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






19. 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)






20. 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






21. 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)






22. 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






23. 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






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






25. Constant vs variable - independent vs dependent






26. Demands - replenishments - - constraints - and costs






27. 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






28. Single order vs repetitive order






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






30. 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






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






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






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






34. Display inventory carried to increase product visibility stimulate demand






35. 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






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






37. Demands - replenishments - constraints - and costs






38. Have most complex and difficult inventory problems






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






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. Minimum rate of return expected on new investments






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






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






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






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






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






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






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






50. Time factor - discontinuity factor - uncertainty factor - economy factor