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






2. Perpetual vs periodic






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






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






5. 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






6. 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






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






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






9. 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






10. Minimum rate of return expected on new investments






11. Demands - replenishments - - constraints - and costs






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






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






14. 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






15. Display inventory carried to increase product visibility stimulate demand






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






17. Single order vs repetitive order






18. Often everybody's concern - but nones responsibility






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






20. Constant vs variable






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






22. Have most complex and difficult inventory problems






23. 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






24. 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






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






26. Sacrificed in exchange for buying needed machines






27. Customers demand for finished goods






28. 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






29. 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






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






31. Time factor - discontinuity factor - uncertainty factor - economy factor






32. Internal vs external






33. Associated insurance cost - associated taxes






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






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






36. 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






37. 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






38. Constant vs variable - independent vs dependent






39. 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






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






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






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






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






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






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






46. Usually a firm's largest expenditure






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






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






49. 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






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