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






2. 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






3. 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)






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






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






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






7. 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






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. 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






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






11. 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






12. 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






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






14. Have most complex and difficult inventory problems






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






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






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






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






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






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






21. 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






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






23. 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






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






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






26. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






30. Internal vs external






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






32. Demands - replenishments - - constraints - and costs






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






34. 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






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






36. Display inventory carried to increase product visibility stimulate demand






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






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






39. Usually a firm's largest expenditure






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






41. 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






42. 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






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






44. 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






45. Demands - replenishments - constraints - and costs






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






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






48. Often everybody's concern - but nones responsibility






49. Perpetual vs periodic






50. Associated insurance cost - associated taxes