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






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






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






4. 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






5. 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)






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






7. 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)






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






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






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






11. 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






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






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






14. Sacrificed in exchange for buying needed machines






15. Associated insurance cost - associated taxes






16. Have most complex and difficult inventory problems






17. 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






18. 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






19. Single order vs repetitive order






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






21. 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






22. Usually a firm's largest expenditure






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






24. 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






25. 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)






26. Constant vs variable






27. Minimum rate of return expected on new investments






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






29. 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






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






31. Constant vs variable - independent vs dependent






32. 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






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






34. 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






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






36. 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






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






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






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






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






41. Demands - replenishments - constraints - and costs






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






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






44. 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






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






46. Perpetual vs periodic






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






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






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






50. Often everybody's concern - but nones responsibility