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






2. 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






3. 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






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






5. Demands - replenishments - - constraints - and costs






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






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






8. Perpetual vs periodic






9. 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






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






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






12. The cost associated with a foregone alternative use of the capital - that is - the benefits that could have been obtained from that alternative






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






14. Usually a firm's largest expenditure






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






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






17. 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)






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






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






20. 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






21. Constant vs variable - independent vs dependent






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






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






24. 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






25. 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






26. 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)






27. 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






28. 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






29. Sacrificed in exchange for buying needed machines






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






31. Constant vs variable






32. Single order vs repetitive order






33. 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






34. 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






35. 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)






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






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






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






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






40. Have most complex and difficult inventory problems






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






42. Display inventory carried to increase product visibility stimulate demand






43. Time factor - discontinuity factor - uncertainty factor - economy factor






44. 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






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






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






47. 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






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






49. 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






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