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. Usually a firm's largest expenditure






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






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






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






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






6. 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)






7. Have most complex and difficult inventory problems






8. Single order vs repetitive order






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






10. 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)






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






12. 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






13. Perpetual vs periodic






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






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






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






17. 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






18. 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






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






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






21. Demands - replenishments - constraints - and costs






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






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






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






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






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






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






29. 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






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






31. 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)






32. 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






33. 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






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






35. 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






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






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






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






39. Often everybody's concern - but nones responsibility






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






41. Constant vs variable - independent vs dependent






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






43. 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






44. Internal vs external






45. Associated insurance cost - associated taxes






46. Sacrificed in exchange for buying needed machines






47. Display inventory carried to increase product visibility stimulate demand






48. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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