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Inventory Management

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
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  • 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. Constant vs variable






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






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






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






5. Perpetual vs periodic






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






7. 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)






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






9. 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






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






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






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






13. 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






14. 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






15. 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






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






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






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






19. 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)






20. Single order vs repetitive order






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






22. Usually a firm's largest expenditure






23. Customers demand for finished goods






24. Associated insurance cost - associated taxes






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






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






27. 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






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






29. 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






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






31. Demands - replenishments - - constraints - and costs






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






33. 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






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






35. 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






36. 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






37. 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






38. 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)






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






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






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






42. Demands - replenishments - constraints - and costs






43. Often everybody's concern - but nones responsibility






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






45. Constant vs variable - independent vs dependent






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






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






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






49. Time factor - discontinuity factor - uncertainty factor - economy factor






50. 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







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