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






2. 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






3. Associated insurance cost - associated taxes






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






5. 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






6. Internal vs external






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






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






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






10. 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)






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






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






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






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






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






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






17. Usually a firm's largest expenditure






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






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






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






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






23. 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






24. Constant vs variable






25. 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)






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






28. Single order vs repetitive order






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






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






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






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






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






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






35. 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






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






37. 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






38. Display inventory carried to increase product visibility stimulate demand






39. Constant vs variable - independent vs dependent






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






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






42. 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






43. Minimum rate of return expected on new investments






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






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






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






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






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






50. 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