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






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






3. 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






4. 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






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






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






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






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






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






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






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






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






13. Minimum rate of return expected on new investments






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






15. 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






16. 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)






17. Sacrificed in exchange for buying needed machines






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






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






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






21. Demands - replenishments - - constraints - and costs






22. Often everybody's concern - but nones responsibility






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






24. Perpetual vs periodic






25. 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






26. 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






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






29. 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)






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






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






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






33. Have most complex and difficult inventory problems






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






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. 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






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






38. Display inventory carried to increase product visibility stimulate demand






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






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






41. 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






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






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






44. 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






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






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






47. 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)






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






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






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