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






2. 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)






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






4. Minimum rate of return expected on new investments






5. Sacrificed in exchange for buying needed machines






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






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






8. Usually a firm's largest expenditure






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






10. 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






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






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






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






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






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






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






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






18. 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






19. Customers demand for finished goods






20. 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






21. 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






22. 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






23. 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






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






25. 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






26. 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






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






28. Associated insurance cost - associated taxes






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






30. Perpetual vs periodic






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






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






33. 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






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






35. 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)






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






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






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






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






40. 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






41. 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






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






43. 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






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






45. Demands - replenishments - - constraints - and costs






46. Often everybody's concern - but nones responsibility






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






48. Display inventory carried to increase product visibility stimulate demand






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






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