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. Demands - replenishments - - constraints - and costs






2. Minimum rate of return expected on new investments






3. 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






4. 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






5. Perpetual vs periodic






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






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






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






10. Constant vs variable






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






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






13. 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






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






15. Constant vs variable - independent vs dependent






16. 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






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






18. 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






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






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






21. 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)






22. 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






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






24. 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)






25. Time factor - discontinuity factor - uncertainty factor - economy factor






26. Usually a firm's largest expenditure






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






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






29. Customers demand for finished goods






30. 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






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






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






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






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






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






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






37. 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






38. 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






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






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






41. Sacrificed in exchange for buying needed machines






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






43. Often everybody's concern - but nones responsibility






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






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






46. 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






47. Internal vs external






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






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






50. Single order vs repetitive order