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






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






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






4. 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






5. Associated insurance cost - associated taxes






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






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






8. Minimum rate of return expected on new investments






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






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






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






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






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






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






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. Usually a firm's largest expenditure






17. Sacrificed in exchange for buying needed machines






18. Single order vs repetitive order






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






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






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






22. Constant vs variable






23. 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






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






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






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






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






28. 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






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






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






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






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






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






34. 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






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






36. 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






37. Demands - replenishments - constraints - and costs






38. 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






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






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






41. 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)






42. Constant vs variable - independent vs dependent






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






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






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






46. 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






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






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






49. 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)






50. Often everybody's concern - but nones responsibility