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. 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






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






3. 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






4. Constant vs variable - independent vs dependent






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






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






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






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






9. Demands - replenishments - - constraints - and costs






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






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






12. 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)






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






14. Customers demand for finished goods






15. Associated insurance cost - associated taxes






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






17. Constant vs variable






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






19. 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






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






21. 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)






22. Often everybody's concern - but nones responsibility






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






24. Sacrificed in exchange for buying needed machines






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






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






27. Have most complex and difficult inventory problems






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






29. 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






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






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. Usually a firm's largest expenditure






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






36. Demands - replenishments - constraints - and costs






37. 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)






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






39. 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






40. Single order vs repetitive order






41. Minimum rate of return expected on new investments






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






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






44. Display inventory carried to increase product visibility stimulate demand






45. 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






46. 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






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






48. 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






49. 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






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