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. 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






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






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






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






5. 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






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






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






8. 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






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






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






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






12. 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






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






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






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






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






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






18. 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






19. Perpetual vs periodic






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






21. 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






22. 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)






23. Time factor - discontinuity factor - uncertainty factor - economy factor






24. Demands - replenishments - - constraints - and costs






25. Constant vs variable






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






27. Have most complex and difficult inventory problems






28. 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






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






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






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






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






33. 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






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






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






37. Internal vs external






38. 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






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






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






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






43. Associated insurance cost - associated taxes






44. Display inventory carried to increase product visibility stimulate demand






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






46. Minimum rate of return expected on new investments






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






48. Usually a firm's largest expenditure






49. Often everybody's concern - but nones responsibility






50. 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