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. Minimum rate of return expected on new investments






2. Display inventory carried to increase product visibility stimulate demand






3. Sacrificed in exchange for buying needed machines






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






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






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






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






8. Constant vs variable - independent vs dependent






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






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






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






12. Customers demand for finished goods






13. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






16. Perpetual vs periodic






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






18. 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)






19. Often everybody's concern - but nones responsibility






20. 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






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






22. Single order vs repetitive order






23. Have most complex and difficult inventory problems






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






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






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






27. 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






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






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






30. 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






31. 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






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






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






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






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






36. 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






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. Usually a firm's largest expenditure






39. Demands - replenishments - constraints - and costs






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






41. Associated insurance cost - associated taxes






42. 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






43. Internal vs external






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






45. 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






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






47. 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)






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






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






50. 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