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






2. Minimum rate of return expected on new investments






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






4. 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)






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






6. 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






7. 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






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






9. 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)






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






11. Single order vs repetitive order






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






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






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






15. Associated insurance cost - associated taxes






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






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






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






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






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






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






22. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






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






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






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






28. Demands - replenishments - constraints - and costs






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






30. Constant vs variable - independent vs dependent






31. 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






32. Often everybody's concern - but nones responsibility






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






34. 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






35. 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






36. Perpetual vs periodic






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






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






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






40. 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)






41. 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






42. Have most complex and difficult inventory problems






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






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






45. 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






46. 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)






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






48. Demands - replenishments - - constraints - and costs






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






50. 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