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. Perpetual vs periodic






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






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






4. Display inventory carried to increase product visibility stimulate demand






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






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






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






8. 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)






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






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






11. 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






12. Associated insurance cost - associated taxes






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






14. Minimum rate of return expected on new investments






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






16. Single order vs repetitive order






17. 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)






18. Constant vs variable - independent vs dependent






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






20. 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






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






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






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






24. 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






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






26. Have most complex and difficult inventory problems






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






28. 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






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






30. Demands - replenishments - - constraints - and costs






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






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






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






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






35. 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






36. 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






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






38. Constant vs variable






39. 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






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






41. Internal vs external






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






43. Often everybody's concern - but nones responsibility






44. 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






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






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






47. Sacrificed in exchange for buying needed machines






48. Customers demand for finished goods






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






50. 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