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






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






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






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






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






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






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






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






9. Sacrificed in exchange for buying needed machines






10. 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)






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






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






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






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






15. Minimum rate of return expected on new investments






16. 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)






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






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






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






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






21. 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






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






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






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






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






26. Internal vs external






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






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






29. 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






30. Often everybody's concern - but nones responsibility






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






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






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






34. Have most complex and difficult inventory problems






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






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






37. 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






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






39. 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






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






41. 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






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






43. 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






44. 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






45. Single order vs repetitive order






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






47. 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






48. Usually a firm's largest expenditure






49. Demands - replenishments - - constraints - and costs






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