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Inventory Management

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. If the firm uses a warehouse or distributor centers - there must be additional pools of finished inventory






2. 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






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






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






5. 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






6. Have most complex and difficult inventory problems






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






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






9. 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






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






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






12. Usually a firm's largest expenditure






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






14. 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






15. 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)






16. 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






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






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






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






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






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






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






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






25. Sacrificed in exchange for buying needed machines






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






27. Internal vs external






28. 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






29. Single order vs repetitive order






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






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






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






33. 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






34. 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






35. 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






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






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






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






39. 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






40. 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






41. Demands - replenishments - - constraints - and costs






42. 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)






43. Associated insurance cost - associated taxes






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






45. Time factor - discontinuity factor - uncertainty factor - economy factor






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






47. Constant vs variable






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






49. As you move up in the supply chain...






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







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