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






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






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






5. 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






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






7. Single order vs repetitive order






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






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






10. Time factor - discontinuity factor - uncertainty factor - economy factor






11. 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)






12. 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






13. Usually a firm's largest expenditure






14. Customers demand for finished goods






15. 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






16. 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






17. Constant vs variable - independent vs dependent






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






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






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






21. 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






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






23. 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






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






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






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






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






28. Often everybody's concern - but nones responsibility






29. Sacrificed in exchange for buying needed machines






30. 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






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






32. Demands - replenishments - constraints - and costs






33. Internal vs external






34. Demands - replenishments - - constraints - and costs






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






36. Have most complex and difficult inventory problems






37. Minimum rate of return expected on new investments






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






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






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






41. 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






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






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






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






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






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






47. 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






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






49. Display inventory carried to increase product visibility stimulate demand






50. Constant vs variable