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. 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






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






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






4. 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






5. 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






6. Demands - replenishments - constraints - and costs






7. 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)






8. Usually a firm's largest expenditure






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






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






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






12. 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






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






14. 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






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






16. 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






17. Display inventory carried to increase product visibility stimulate demand






18. Often everybody's concern - but nones responsibility






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






20. Single order vs repetitive order






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






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






23. 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)






24. Associated insurance cost - associated taxes






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






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






27. 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






28. 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






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






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






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






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






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






34. Constant vs variable - independent vs dependent






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






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






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






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






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






40. 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






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






42. Minimum rate of return expected on new investments






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






44. 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






45. Have most complex and difficult inventory problems






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






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






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






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






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