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. 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






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






3. 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






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






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






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






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






8. Associated insurance cost - associated taxes






9. Minimum rate of return expected on new investments






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






11. Internal vs external






12. Perpetual vs periodic






13. Constant vs variable - independent vs dependent






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






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






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






17. Demands - replenishments - - constraints - and costs






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






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. Display inventory carried to increase product visibility stimulate demand






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






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






23. Have most complex and difficult inventory problems






24. 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






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






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






27. 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)






28. 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






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






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






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






32. 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






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






34. Single order vs repetitive order






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






36. Constant vs variable






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






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






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






40. Time factor - discontinuity factor - uncertainty factor - economy factor






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






42. 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






43. Usually a firm's largest expenditure






44. 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






45. 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






46. 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






47. 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






48. Sacrificed in exchange for buying needed machines






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






50. 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