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. 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






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






3. Demands - replenishments - constraints - and costs






4. Constant vs variable - independent vs dependent






5. Often everybody's concern - but nones responsibility






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






7. Constant vs variable






8. 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






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






10. 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






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






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






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






14. Minimum rate of return expected on new investments






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






16. Customers demand for finished goods






17. Display inventory carried to increase product visibility stimulate demand






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






19. Perpetual vs periodic






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






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






22. 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






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






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






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






26. 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)






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






28. 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






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






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






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






32. 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






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






34. Internal vs external






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






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






37. 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






38. Have most complex and difficult inventory problems






39. 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






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






41. 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)






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






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






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






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






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






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






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






50. 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