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 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






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






3. Customers demand for finished goods






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






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






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






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






8. 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






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






10. Perpetual vs periodic






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






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






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






14. 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






15. 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






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






17. Single order vs repetitive order






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






19. 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






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






21. 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)






22. Demands - replenishments - constraints - and costs






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






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






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






26. 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)






27. Demands - replenishments - - constraints - and costs






28. 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






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






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






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






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






33. 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






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






35. Often everybody's concern - but nones responsibility






36. 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)






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






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






39. Time factor - discontinuity factor - uncertainty factor - economy factor






40. Sacrificed in exchange for buying needed machines






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






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






43. 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






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






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






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






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






48. Associated insurance cost - associated taxes






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






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