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






2. Customers demand for finished goods






3. Usually a firm's largest expenditure






4. 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






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






6. Sacrificed in exchange for buying needed machines






7. Time factor - discontinuity factor - uncertainty factor - economy factor






8. 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






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






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






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






12. Single order vs repetitive order






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






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






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






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






17. 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






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






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






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






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






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






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






24. 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)






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






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






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






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






29. Constant vs variable






30. 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






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






33. 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






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






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






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






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






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






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






40. 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






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






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






43. Display inventory carried to increase product visibility stimulate demand






44. 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






45. 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






46. 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






47. Often everybody's concern - but nones responsibility






48. Internal vs external






49. Demands - replenishments - constraints - and costs






50. Constant vs variable - independent vs dependent