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. Demands - replenishments - - constraints - and costs






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






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






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






5. 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






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






7. 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)






8. 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)






9. 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






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






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






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






13. 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






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






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






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






17. 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






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






19. 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






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






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






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






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






24. Units taken from inventory - can be categorized by: 1) size (magnitude/quality - constant vs variable and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






25. 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






26. 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






27. Time factor - discontinuity factor - uncertainty factor - economy factor






28. Single order vs repetitive order






29. 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






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






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






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






33. Associated insurance cost - associated taxes






34. 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






35. Internal vs external






36. Customers demand for finished goods






37. 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






38. Minimum rate of return expected on new investments






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






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






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






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






43. 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






44. Usually a firm's largest expenditure






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






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






47. 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






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






49. 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






50. Constant vs variable