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






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






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






5. 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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






6. 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






7. 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






8. 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)






9. Have most complex and difficult inventory problems






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






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






12. Customers demand for finished goods






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






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






15. 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






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






17. 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






18. Usually a firm's largest expenditure






19. 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






20. 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






21. The cost for the item as it is laced in inventory - unit purchase cost (if obtained externally and includes delivery and transportation costs) - unit production cost (if made in house and includes labor - material and overhead costs)






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






23. Constant vs variable - independent vs dependent






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






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






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






27. Demands - replenishments - - constraints - and costs






28. 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






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






30. 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






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






32. 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






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






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






35. 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)






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






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






38. 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






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






40. 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






41. Associated insurance cost - associated taxes






42. 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






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






44. Perpetual vs periodic






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






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






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






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






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






50. Demands - replenishments - constraints - and costs