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. Display inventory carried to increase product visibility stimulate demand






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






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






4. Have most complex and difficult inventory problems






5. 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






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






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






8. 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






9. 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






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






11. Associated insurance cost - associated taxes






12. 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






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






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






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






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






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






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






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






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






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






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






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






24. 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)






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






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






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






28. 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






29. Customers demand for finished goods






30. Internal vs external






31. 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






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






33. 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)






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






35. Time factor - discontinuity factor - uncertainty factor - economy factor






36. 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






37. 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






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






39. Often everybody's concern - but nones responsibility






40. 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






41. 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






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






43. Minimum rate of return expected on new investments






44. Perpetual vs periodic






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






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






47. 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)






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






49. 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)






50. Demands - replenishments - - constraints - and costs