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. 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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






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






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






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






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






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






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






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






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






10. Demands - replenishments - - constraints - and costs






11. Internal vs external






12. Often everybody's concern - but nones responsibility






13. 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






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






15. 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






16. 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






17. 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)






18. Usually a firm's largest expenditure






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






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






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






22. Minimum rate of return expected on new investments






23. Customers demand for finished goods






24. 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






25. 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






26. 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






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






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






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






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






31. 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






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






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






34. Demands - replenishments - constraints - and costs






35. Constant vs variable






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






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






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






39. Constant vs variable - independent vs dependent






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






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






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






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






44. 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






45. 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)






46. Capital costs - storage space costs - inventory service cost - inventory risk cost






47. 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






48. Display inventory carried to increase product visibility stimulate demand






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






50. 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