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






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






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






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






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






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






7. Sacrificed in exchange for buying needed machines






8. Minimum rate of return expected on new investments






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






10. 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






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






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






13. Time factor - discontinuity factor - uncertainty factor - economy factor






14. Customers demand for finished goods






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






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






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






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






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






20. Constant vs variable - independent vs dependent






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






22. Usually a firm's largest expenditure






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






24. 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






25. 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






26. 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)






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






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






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






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






31. 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






32. Demands - replenishments - - constraints - and costs






33. 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






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






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






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






37. Constant vs variable






38. 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






39. 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






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






41. 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






42. 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






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






44. Demands - replenishments - constraints - and costs






45. 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






46. Have most complex and difficult inventory problems






47. 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)






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