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. Usually a firm's largest expenditure






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






3. Perpetual vs periodic






4. 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






5. 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)






6. 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






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






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






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






10. 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






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






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






13. Demands - replenishments - constraints - and costs






14. 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






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






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






17. Display inventory carried to increase product visibility stimulate demand






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






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






20. Sacrificed in exchange for buying needed machines






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






22. Internal vs external






23. Have most complex and difficult inventory problems






24. Customers demand for finished goods






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






26. Constant vs variable - independent vs dependent






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






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






29. 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






30. Single order vs repetitive order






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






32. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






35. 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






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






37. 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






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






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






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






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






42. Demands - replenishments - - constraints - and costs






43. 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






44. 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






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






46. Constant vs variable






47. 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)






48. Often everybody's concern - but nones responsibility






49. 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






50. 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)