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. Display inventory carried to increase product visibility stimulate demand






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






3. Associated insurance cost - associated taxes






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






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






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






7. 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






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






9. 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






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






11. Have most complex and difficult inventory problems






12. 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






13. Demands - replenishments - - constraints - and costs






14. 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)






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






16. 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






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






18. 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






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






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






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






22. Demands - replenishments - constraints - and costs






23. 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






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






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






26. 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






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






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






29. 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






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






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






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






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






34. 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






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






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






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






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






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






40. 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






41. 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






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






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






44. Sacrificed in exchange for buying needed machines






45. 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






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






47. Usually a firm's largest expenditure






48. 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






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






50. Internal vs external