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. 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)






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






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






5. 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






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






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. Customers demand for finished goods






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






10. Constant vs variable






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






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






13. 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






14. Constant vs variable - independent vs dependent






15. 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






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






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






18. Perpetual vs periodic






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






20. 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






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






22. Display inventory carried to increase product visibility stimulate demand






23. Minimum rate of return expected on new investments






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






25. 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






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






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






28. 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






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






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






31. Usually a firm's largest expenditure






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






33. 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)






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






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






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






37. 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






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






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






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






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






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






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






44. Internal vs external






45. Single order vs repetitive order






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






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






48. 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)






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






50. Associated insurance cost - associated taxes