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






2. 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)






3. Demands - replenishments - constraints - and costs






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






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






6. 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






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






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






9. 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






10. 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






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






12. 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






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






14. Have most complex and difficult inventory problems






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






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. Minimum rate of return expected on new investments






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






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






20. Display inventory carried to increase product visibility stimulate demand






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






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






23. Demands - replenishments - - constraints - and costs






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. 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






26. Perpetual vs periodic






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






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






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






30. 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






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






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






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






34. Time factor - discontinuity factor - uncertainty factor - economy factor






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






36. Associated insurance cost - associated taxes






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






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






39. 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






40. 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)






41. Single order vs repetitive order






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






43. 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)






44. 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






45. 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






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






47. 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)






48. Often everybody's concern - but nones responsibility






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






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