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






2. 1) difficulties in synchronizing supply and demand (supply and demand often differ in the rates at which they provide and require stock) 2) material-related operations take time (goods cannot be produced the instant demand occurs)






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






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






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






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






7. Associated insurance cost - associated taxes






8. Display inventory carried to increase product visibility stimulate demand






9. Demands - replenishments - - constraints - and costs






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






11. Time factor - discontinuity factor - uncertainty factor - economy factor






12. Internal vs external






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






14. 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






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






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






17. 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






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






19. Single order vs repetitive order






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






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






22. Usually a firm's largest expenditure






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






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






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






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






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






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






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






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






31. Minimum rate of return expected on new investments






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






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






34. 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






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






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






38. 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)






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






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






41. 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)






42. 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






43. 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)






44. Constant vs variable






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






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






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






48. Perpetual vs periodic






49. 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






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