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






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






3. Associated insurance cost - associated taxes






4. 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






5. Constant vs variable - independent vs dependent






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






7. 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






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






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






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






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. Have most complex and difficult inventory problems






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






16. 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






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






18. 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






19. 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






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






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






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






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






24. Constant vs variable






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






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






28. 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






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






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






31. 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)






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






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






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






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






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






37. 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






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






39. 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)






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






41. 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






42. Perpetual vs periodic






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






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






45. Demands - replenishments - - constraints - and costs






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






47. Usually a firm's largest expenditure






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






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






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