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. 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






2. Usually a firm's largest expenditure






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






4. 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






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






6. 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






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






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






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






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






11. 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






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






13. 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)






14. Internal vs external






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






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






17. Perpetual vs periodic






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






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






20. Constant vs variable






21. Demands - replenishments - - constraints - and costs






22. 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






23. Often everybody's concern - but nones responsibility






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






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






26. Constant vs variable - independent vs dependent






27. Each pool requires synchronization of the rate of flow into and from it - no pool can be controlled without respect to the others - problems in one pool will effect all others - raises question of how much to order at any given time and when to pl






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






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






30. 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)






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






32. 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






33. 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






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






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






36. Single order vs repetitive order






37. 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






38. 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






39. Demands - replenishments - constraints - and costs






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






41. Have most complex and difficult inventory problems






42. 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






43. Minimum rate of return expected on new investments






44. Customers demand for finished goods






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






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






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






48. 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)






49. 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






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