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






2. Perpetual vs periodic






3. 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






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






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






6. 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)






7. 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






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






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






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






11. Have most complex and difficult inventory problems






12. 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






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






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






15. 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






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






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






18. 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






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






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






21. 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






22. 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






23. 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)






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






25. 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






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






27. 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






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






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






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






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






32. 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






33. Display inventory carried to increase product visibility stimulate demand






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






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






38. Customers demand for finished goods






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






40. Usually a firm's largest expenditure






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






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






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






44. Internal vs external






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






46. 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






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






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






49. 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






50. 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