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






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






3. Purchase - oder cost or set up cost - stock out cost - and inventory holding costs (aka inventory carrying costs)






4. Display inventory carried to increase product visibility stimulate demand






5. 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






6. 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






7. 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)






8. 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






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






10. 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






11. Perpetual vs periodic






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






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






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






15. 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






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






17. The cost associated with the money tied up in inventory and the cost associated with maintaining it in storage - usually expressed as a percentage of items value - includes capital costs - storage space costs - inventory service costs and invento






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






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






20. 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






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






22. Time factor - discontinuity factor - uncertainty factor - economy factor






23. 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






24. 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






25. 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






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






27. 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






28. Associated insurance cost - associated taxes






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






30. 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






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






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






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






34. 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






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






36. Customers demand for finished goods






37. 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






38. 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






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






40. Constant vs variable - independent vs dependent






41. Constant vs variable






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






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






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






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






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






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






48. Usually a firm's largest expenditure






49. Demands - replenishments - constraints - and costs






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