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. Often everybody's concern - but nones responsibility






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






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






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






5. 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






6. 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)






7. 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






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






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






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






11. 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






12. 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






13. Single order vs repetitive order






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






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






16. 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)






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






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






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






20. Internal vs external






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






22. 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)






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






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






25. Perpetual vs periodic






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






27. Usually a firm's largest expenditure






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






29. Sacrificed in exchange for buying needed machines






30. 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






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






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






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






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






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






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. 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






38. Demands - replenishments - - constraints - and costs






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






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






42. Associated insurance cost - associated taxes






43. Customers demand for finished goods






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






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






46. Minimum rate of return expected on new investments






47. Have most complex and difficult inventory problems






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






49. 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






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