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






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






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






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






5. Demands - replenishments - - constraints - and costs






6. 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






7. Internal vs external






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






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






10. 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






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






12. 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






13. Usually a firm's largest expenditure






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






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






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






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






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






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






20. 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






21. Minimum rate of return expected on new investments






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






23. Associated insurance cost - associated taxes






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






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. 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






27. Often everybody's concern - but nones responsibility






28. 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






29. 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






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






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






32. Demands - replenishments - constraints - and costs






33. Customers demand for finished goods






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






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






36. Sacrificed in exchange for buying needed machines






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






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






39. 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)






40. 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)






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






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






43. Have most complex and difficult inventory problems






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






45. 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






46. 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






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






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






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






50. Single order vs repetitive order