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. 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






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






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






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






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






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






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






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






9. 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)






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. Cost of the facility - material handling (labor and energy) - maintenance cost - and some utility cost






12. Display inventory carried to increase product visibility stimulate demand






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






15. 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






16. 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






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






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






19. 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






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






21. Customers demand for finished goods






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






23. 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)






24. 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






25. 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






26. 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






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






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






29. 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






30. Demands - replenishments - - constraints - and costs






31. Single order vs repetitive order






32. Sacrificed in exchange for buying needed machines






33. 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






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






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






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






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






38. Constant vs variable






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






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






41. Often everybody's concern - but nones responsibility






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






43. Have most complex and difficult inventory problems






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






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






46. 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)






47. 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






48. 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






49. Internal vs external






50. Demands - replenishments - constraints - and costs