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






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






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. Sacrificed in exchange for buying needed machines






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






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






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






8. Display inventory carried to increase product visibility stimulate demand






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






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






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






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






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






15. 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






16. Associated insurance cost - associated taxes






17. Single order vs repetitive order






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






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






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






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






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






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






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






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






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






29. 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






30. Usually a firm's largest expenditure






31. Constant vs variable






32. 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






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






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






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






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






37. 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






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






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






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






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






42. Internal vs external






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






44. 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






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






46. Minimum rate of return expected on new investments






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






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






49. 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






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