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. 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






2. 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






3. 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






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






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






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






7. 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






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






9. Customers demand for finished goods






10. 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






11. Often everybody's concern - but nones responsibility






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






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. 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)






15. Demands - replenishments - constraints - and costs






16. Associated insurance cost - associated taxes






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






18. Usually a firm's largest expenditure






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






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






21. 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)






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






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






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






25. Demands - replenishments - - constraints - and costs






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






27. Internal vs external






28. Sacrificed in exchange for buying needed machines






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






30. 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






31. 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






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






33. 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






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






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






36. 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






37. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






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






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






42. 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






43. 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






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






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






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






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






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






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






50. Minimum rate of return expected on new investments