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






2. Perpetual vs periodic






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






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






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






6. Have most complex and difficult inventory problems






7. Often everybody's concern - but nones responsibility






8. Usually a firm's largest expenditure






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






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






11. 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






12. 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






13. 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)






14. 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






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






16. Sacrificed in exchange for buying needed machines






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






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






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






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






22. 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






23. 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






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






25. 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






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






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






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






29. Internal vs external






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






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






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






33. Time factor - discontinuity factor - uncertainty factor - economy factor






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






35. Single order vs repetitive order






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






37. 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)






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






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






40. 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)






41. Constant vs variable






42. Demands - replenishments - - constraints - and costs






43. Constant vs variable - independent vs dependent






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






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






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






47. 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






48. 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






49. Associated insurance cost - associated taxes






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