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. Have most complex and difficult inventory problems






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






3. 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






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






5. Associated insurance cost - associated taxes






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






7. 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






8. Constant vs variable






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






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






11. 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






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






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






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






15. Demands - replenishments - - constraints - and costs






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






17. 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






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






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






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






21. 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






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






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






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






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






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






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






28. Display inventory carried to increase product visibility stimulate demand






29. 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






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






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






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






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






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






35. Demands - replenishments - constraints - and costs






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






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






38. Customers demand for finished goods






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






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






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






42. Sacrificed in exchange for buying needed machines






43. 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)






44. 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)






45. 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






46. 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)






47. Involves controlling the flow of materials into and out of a system - a big timing problem






48. Minimum rate of return expected on new investments






49. Time factor - discontinuity factor - uncertainty factor - economy factor






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