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. Demands - replenishments - - constraints - and costs






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






3. Customers demand for finished goods






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






5. 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






6. Sacrificed in exchange for buying needed machines






7. 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






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






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






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






11. 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






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






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






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






15. 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)






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






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






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






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






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






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






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






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






24. Have most complex and difficult inventory problems






25. 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






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






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






28. 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






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






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






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






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






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






34. Constant vs variable






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






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. 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)






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






39. 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






40. Time factor - discontinuity factor - uncertainty factor - economy factor






41. 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)






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






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. Allows freedom of operation for members of the supply chain; allows the treatment of various dependent operations (ex: retailing - warehousing - manufacturing - and purchasing) in an independent and economical manor






45. Minimum rate of return expected on new investments






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






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






48. Often everybody's concern - but nones responsibility






49. Perpetual vs periodic






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