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






2. 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






3. 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






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






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






7. 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






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






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






10. 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






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






12. 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)






13. 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






14. 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






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






16. 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






17. Have most complex and difficult inventory problems






18. 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






19. Demands - replenishments - constraints - and costs






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






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






22. Display inventory carried to increase product visibility stimulate demand






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






24. Constant vs variable






25. Internal vs external






26. Single order vs repetitive order






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






28. 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






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






30. 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






31. 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)






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






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






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






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






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






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






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






39. 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






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






41. 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






42. Often everybody's concern - but nones responsibility






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






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






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






46. Customers demand for finished goods






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






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






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






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