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






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






3. Single order vs repetitive order






4. Usually a firm's largest expenditure






5. 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






6. Sacrificed in exchange for buying needed machines






7. 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






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






9. 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






10. Demands - replenishments - constraints - and costs






11. 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






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






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






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






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






16. Display inventory carried to increase product visibility stimulate demand






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






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






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






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






21. Often everybody's concern - but nones responsibility






22. 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






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






25. Demands - replenishments - - constraints - and costs






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






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






28. 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






29. 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






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






31. Constant vs variable - independent vs dependent






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






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






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






35. Time factor - discontinuity factor - uncertainty factor - economy factor






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






37. 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






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






39. Have most complex and difficult inventory problems






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






41. 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






42. 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






43. 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






44. Minimum rate of return expected on new investments






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






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






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






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






49. Perpetual vs periodic






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