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. Single order vs repetitive order






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






3. 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






4. 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






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






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






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






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






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






10. Internal vs external






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






12. Those cost that vary with the amount of inventory in the short run






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






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






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






16. Often everybody's concern - but nones responsibility






17. Customers demand for finished goods






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






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






20. Time factor - discontinuity factor - uncertainty factor - economy factor






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






22. Sacrificed in exchange for buying needed machines






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






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






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






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






27. 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






28. 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






29. 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






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






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






32. Constant vs variable - independent vs dependent






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






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. Display inventory carried to increase product visibility stimulate demand






36. 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)






37. 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






38. 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)






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






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






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






42. 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






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






44. 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






45. Constant vs variable






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






47. 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






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






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






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