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. Constant vs variable - independent vs dependent






2. Demands - replenishments - constraints - and costs






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






4. 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






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






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






7. 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)






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






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






10. Demands - replenishments - - constraints - and costs






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






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






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






14. 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)






15. It takes time to make a product - but consumers want them on demand






16. 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)






17. 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






18. 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






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






20. Internal vs external






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






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






23. 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






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






25. 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






26. Constant vs variable






27. 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






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






29. Minimum rate of return expected on new investments






30. Single order vs repetitive order






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






32. Often everybody's concern - but nones responsibility






33. 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






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






35. 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






36. 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






37. 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






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






39. Display inventory carried to increase product visibility stimulate demand






40. Associated insurance cost - associated taxes






41. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






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






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






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






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






48. 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






49. Perpetual vs periodic






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