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






2. 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)






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






4. 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






5. Perpetual vs periodic






6. 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)






7. Customers demand for finished goods






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






9. Demands - replenishments - constraints - and costs






10. Usually a firm's largest expenditure






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






12. 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)






13. 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






14. 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






15. Have most complex and difficult inventory problems






16. 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






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






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






19. 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






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






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






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






23. 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






24. Associated insurance cost - associated taxes






25. 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






26. 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






27. Demands - replenishments - - constraints - and costs






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






29. Minimum rate of return expected on new investments






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






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






32. Constant vs variable - independent vs dependent






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






34. 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






35. 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






36. Internal vs external






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






38. 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






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






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






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






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






43. 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






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






45. Single order vs repetitive order






46. Constant vs variable






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






48. Often everybody's concern - but nones responsibility






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






50. 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