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






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






3. Demands - replenishments - constraints - and costs






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






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






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






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






8. 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






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






10. 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






11. Have most complex and difficult inventory problems






12. 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






13. Single order vs repetitive order






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






15. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






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






19. 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






20. 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






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






22. 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






23. Demands - replenishments - - constraints - and costs






24. Customers demand for finished goods






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






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






28. 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






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






30. Constant vs variable - independent vs dependent






31. 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






32. 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






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






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






35. Associated insurance cost - associated taxes






36. Sacrificed in exchange for buying needed machines






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






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






39. 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






40. 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)






41. 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






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






43. Display inventory carried to increase product visibility stimulate demand






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






45. 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)






46. 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






47. 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






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






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






50. Minimum rate of return expected on new investments