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






2. 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






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






4. Internal vs external






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






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






7. Associated insurance cost - associated taxes






8. Single order vs repetitive order






9. 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






10. Demands - replenishments - constraints - and costs






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






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






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






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






15. Perpetual vs periodic






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






17. 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






18. 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






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






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






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






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






23. Minimum rate of return expected on new investments






24. 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






25. Constant vs variable






26. 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






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






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






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






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






31. 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)






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






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






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






35. Time factor - discontinuity factor - uncertainty factor - economy factor






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






37. 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






38. 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






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






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






41. 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






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






43. 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)






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






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






46. 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






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






48. 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






49. Often everybody's concern - but nones responsibility






50. 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