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






2. Usually a firm's largest expenditure






3. 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)






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






5. Time factor - discontinuity factor - uncertainty factor - economy factor






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






7. 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






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






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






10. Perpetual vs periodic






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






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






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






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






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






16. 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






17. 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






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






19. 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






20. 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






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






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






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






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






25. 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






26. Associated insurance cost - associated taxes






27. 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






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






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






30. 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)






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






32. Minimum rate of return expected on new investments






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






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






35. Display inventory carried to increase product visibility stimulate demand






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






37. Often everybody's concern - but nones responsibility






38. 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






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






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






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






42. 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






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






44. 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






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






46. Constant vs variable






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






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






49. Demands - replenishments - constraints - and costs






50. Internal vs external