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. 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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






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






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






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






5. 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






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






7. Minimum rate of return expected on new investments






8. 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






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






11. 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)






12. 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






13. Have most complex and difficult inventory problems






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






15. 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






16. 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






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






18. Single order vs repetitive order






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






20. Demands - replenishments - - constraints - and costs






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






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






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






24. 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






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






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






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






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






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






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






31. Sacrificed in exchange for buying needed machines






32. Often everybody's concern - but nones responsibility






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






34. Internal vs external






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






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






37. 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






38. Constant vs variable






39. 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






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






41. Associated insurance cost - associated taxes






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






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






44. 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






45. 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






46. Constant vs variable - independent vs dependent






47. 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






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






49. Customers demand for finished goods






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