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






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






3. 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)






4. 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






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






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






7. 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






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






9. 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






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






11. 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






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






13. 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






14. Customers demand for finished goods






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






16. 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






17. Time factor - discontinuity factor - uncertainty factor - economy factor






18. Associated insurance cost - associated taxes






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






20. Minimum rate of return expected on new investments






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






22. 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






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






24. Constant vs variable - independent vs dependent






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






26. 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)






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






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






29. 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






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






31. Internal vs external






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






33. 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






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






35. 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






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






37. 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






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






39. 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)






40. 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)






41. 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






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






43. Demands - replenishments - constraints - and costs






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






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






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






48. Have most complex and difficult inventory problems






49. Sacrificed in exchange for buying needed machines






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







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