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






2. 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)






3. Demands - replenishments - constraints - and costs






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






5. Constant vs variable - independent vs dependent






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






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






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






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






10. Associated insurance cost - associated taxes






11. Have most complex and difficult inventory problems






12. Perpetual vs periodic






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






14. 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






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






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






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






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






21. Often everybody's concern - but nones responsibility






22. 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)






23. Internal vs external






24. Demands - replenishments - - constraints - and costs






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






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






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






28. 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






29. 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






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






31. 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






32. Display inventory carried to increase product visibility stimulate demand






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






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






35. 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






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






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. 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






39. Usually a firm's largest expenditure






40. 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






41. Constant vs variable






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






43. Customers demand for finished goods






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






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






46. 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






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






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






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






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