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






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






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






4. Customers demand for finished goods






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






6. Perpetual vs periodic






7. 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






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






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






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






11. Time factor - discontinuity factor - uncertainty factor - economy factor






12. 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






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






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






15. 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






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






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






18. The stock of materials on hand at a given time and the unutilized assets waiting for sale or use






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






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






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






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






23. Demands - replenishments - - constraints - and costs






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






25. Minimum rate of return expected on new investments






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






27. Internal vs external






28. Often everybody's concern - but nones responsibility






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






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






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






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






33. 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






34. 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






35. 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






36. Display inventory carried to increase product visibility stimulate demand






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. 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)






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






40. 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






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






42. 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






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. 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






45. 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)






46. 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)






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






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






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






50. 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)