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 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






2. 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






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






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






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






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






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






8. Perpetual vs periodic






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






10. Constant vs variable






11. 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)






12. Display inventory carried to increase product visibility stimulate demand






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






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






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






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






17. Sacrificed in exchange for buying needed machines






18. Demands - replenishments - - constraints - and costs






19. Usually a firm's largest expenditure






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






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






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






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






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






28. 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






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






30. 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






31. Internal vs external






32. 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)






33. Time factor - discontinuity factor - uncertainty factor - economy factor






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






35. 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






36. Have most complex and difficult inventory problems






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






38. Associated insurance cost - associated taxes






39. 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






40. 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






41. Minimum rate of return expected on new investments






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






43. 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






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






45. Customers demand for finished goods






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






47. 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






48. 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)






49. 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






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