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. Constant vs variable - independent vs dependent






2. Usually a firm's largest expenditure






3. 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






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






6. Associated insurance cost - associated taxes






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






9. 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






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






11. Often everybody's concern - but nones responsibility






12. 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)






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






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






15. 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






16. 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)






17. Sacrificed in exchange for buying needed machines






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






19. 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






20. 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






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






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






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






25. 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






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






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






28. Time factor - discontinuity factor - uncertainty factor - economy factor






29. Display inventory carried to increase product visibility stimulate demand






30. 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






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






32. Demands - replenishments - - constraints - and costs






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






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






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






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






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






38. Customers demand for finished goods






39. 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






40. 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)






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






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






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






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






45. 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






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






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






48. Internal vs external






49. Have most complex and difficult inventory problems






50. Demands - replenishments - constraints - and costs