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






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






3. 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






4. Display inventory carried to increase product visibility stimulate demand






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






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






7. Demands - replenishments - - constraints - and costs






8. 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






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






10. Sacrificed in exchange for buying needed machines






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






12. Demands - replenishments - constraints - and costs






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






14. 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






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






16. 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






17. Internal vs external






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






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






20. Perpetual vs periodic






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






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






23. Constant vs variable - independent vs dependent






24. 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






25. 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






26. Single order vs repetitive order






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






28. 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)






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






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






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






32. 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






33. 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)






34. 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






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. Usually a firm's largest expenditure






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






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






39. 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






40. 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)






41. Have most complex and difficult inventory problems






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






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






44. 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






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. Often everybody's concern - but nones responsibility






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






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






49. Associated insurance cost - associated taxes






50. 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