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. Internal vs external






2. Usually a firm's largest expenditure






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






4. Demands - replenishments - - constraints - and costs






5. 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)






6. 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






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






8. 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)






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






10. Associated insurance cost - associated taxes






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






12. Have most complex and difficult inventory problems






13. Minimum rate of return expected on new investments






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






15. 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






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






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






18. 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)






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






20. 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






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






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






23. 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






24. Demands - replenishments - constraints - and costs






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






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






27. 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






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






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






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. Display inventory carried to increase product visibility stimulate demand






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






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






34. 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






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






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






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






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






39. Constant vs variable






40. Often everybody's concern - but nones responsibility






41. 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)






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






43. Constant vs variable - independent vs dependent






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






45. Customers demand for finished goods






46. 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






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






48. 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






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






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