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






2. 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)






3. 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






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






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






6. Constant vs variable - independent vs dependent






7. 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)






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






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






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






11. 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






12. Time factor - discontinuity factor - uncertainty factor - economy factor






13. 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






14. 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






15. Associated insurance cost - associated taxes






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






17. 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






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






19. 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






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






21. 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






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






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






24. 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






25. Often everybody's concern - but nones responsibility






26. 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






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






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






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






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






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






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






33. 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






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






35. 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






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






37. 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






38. Internal vs external






39. Single order vs repetitive order






40. Usually a firm's largest expenditure






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






42. 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






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






44. Display inventory carried to increase product visibility stimulate demand






45. Sacrificed in exchange for buying needed machines






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






47. Demands - replenishments - constraints - and costs






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






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






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