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






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






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






4. Allows freedom of operation for members of the supply chain; allows the treatment of various dependent operations (ex: retailing - warehousing - manufacturing - and purchasing) in an independent and economical manor






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






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






7. 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)






8. Perpetual vs periodic






9. Internal vs external






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






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






12. Display inventory carried to increase product visibility stimulate demand






13. Constant vs variable - independent vs dependent






14. Often everybody's concern - but nones responsibility






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






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






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






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






19. Minimum rate of return expected on new investments






20. 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






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






22. 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






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






24. 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






25. 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






26. 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






27. 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






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






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






30. 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






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






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






33. Customers demand for finished goods






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






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






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






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






38. Constant vs variable






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






40. 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






41. 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)






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






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






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






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






46. 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






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






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






49. Usually a firm's largest expenditure






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