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. 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






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






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






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






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






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






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






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






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






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






11. Have most complex and difficult inventory problems






12. Internal vs external






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






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






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






16. Perpetual vs periodic






17. 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






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






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






20. Constant vs variable - independent vs dependent






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






22. 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






23. 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






24. 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)






25. 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






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






27. 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






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






29. 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






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






31. Usually a firm's largest expenditure






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






33. 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






34. Associated insurance cost - associated taxes






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. 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)






37. Customers demand for finished goods






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






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






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






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






42. Single order vs repetitive order






43. Demands - replenishments - - constraints - and costs






44. 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






45. 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






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






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






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






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






50. Sacrificed in exchange for buying needed machines