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






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. Display inventory carried to increase product visibility stimulate demand






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






5. Have most complex and difficult inventory problems






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






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






8. 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






9. Perpetual vs periodic






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






11. Demands - replenishments - - constraints - and costs






12. 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)






13. Often everybody's concern - but nones responsibility






14. Constant vs variable






15. 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






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






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






18. 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






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






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






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






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






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






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






25. Demands - replenishments - constraints - and costs






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






27. Associated insurance cost - associated taxes






28. 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






29. 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






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






31. 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






32. 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






33. Customers demand for finished goods






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






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






36. Sacrificed in exchange for buying needed machines






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






38. Usually a firm's largest expenditure






39. Minimum rate of return expected on new investments






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






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






42. 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






43. 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






44. 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)






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






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






47. 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






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






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






50. 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