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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. 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






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






3. 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






4. Often everybody's concern - but nones responsibility






5. Sacrificed in exchange for buying needed machines






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






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






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






9. 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






10. 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)






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






12. Demands - replenishments - constraints - and costs






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






14. 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






15. 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)






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






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






18. Display inventory carried to increase product visibility stimulate demand






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






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






21. 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






22. 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






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






24. Perpetual vs periodic






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






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






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






28. 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)






29. Single order vs repetitive order






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






31. 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






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






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






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






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






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






37. Minimum rate of return expected on new investments






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






39. 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






40. 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






41. Constant vs variable






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






43. Customers demand for finished goods






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






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






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






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






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






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






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







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