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Inventory Management

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
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  • Match each statement with the correct term.
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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. Have most complex and difficult inventory problems






2. Customers demand for finished goods






3. Constant vs variable






4. 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






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






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






7. 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)






8. 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






9. 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






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






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






12. 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






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






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






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






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






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






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






20. Display inventory carried to increase product visibility stimulate demand






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






22. 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






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






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






25. 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)






26. 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






27. Perpetual vs periodic






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






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






30. Time factor - discontinuity factor - uncertainty factor - economy factor






31. Single order vs repetitive order






32. 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






33. 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






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






35. 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






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






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






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






40. Constant vs variable - independent vs dependent






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






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






43. Internal vs external






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






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






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






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






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






49. Often everybody's concern - but nones responsibility






50. 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







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