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. 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






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






3. Usually a firm's largest expenditure






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






5. 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






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






7. Sacrificed in exchange for buying needed machines






8. 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






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






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






11. 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






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






13. 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






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






15. Minimum rate of return expected on new investments






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






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






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






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






20. 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






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






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






23. Constant vs variable






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






25. Time factor - discontinuity factor - uncertainty factor - economy factor






26. 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






27. 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






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






29. 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)






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






31. Single order vs repetitive order






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






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






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






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






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






37. Often everybody's concern - but nones responsibility






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






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






40. 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






41. Internal vs external






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






43. 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






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






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






46. Customers demand for finished goods






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






48. 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)






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






50. 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