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






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






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






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






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






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






7. 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






8. 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






9. Usually a firm's largest expenditure






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






11. 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






12. 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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






13. Minimum rate of return expected on new investments






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






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. 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






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






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






19. Perpetual vs periodic






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






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






22. 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






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






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






25. 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






26. 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






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






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






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






30. 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






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






32. 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






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






34. 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






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






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






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






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






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






40. 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)






41. Internal vs external






42. Customers demand for finished goods






43. Often everybody's concern - but nones responsibility






44. 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






45. Demands - replenishments - - constraints - and costs






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






47. 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)






48. Demands - replenishments - constraints - and costs






49. 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






50. Constant vs variable