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






2. 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






3. Sacrificed in exchange for buying needed machines






4. 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






5. 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)






6. Customers demand for finished goods






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






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






9. 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






10. 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)






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






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






14. 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






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






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






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






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






19. Display inventory carried to increase product visibility stimulate demand






20. It takes time to make a product - but consumers want them on demand






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






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






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






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






25. Minimum rate of return expected on new investments






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






27. Single order vs repetitive order






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






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






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






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






32. 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






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






34. 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






35. 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






36. 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






37. 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






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






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






40. Associated insurance cost - associated taxes






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






42. 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)






43. Have most complex and difficult inventory problems






44. 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






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






46. Usually a firm's largest expenditure






47. Constant vs variable - independent vs dependent






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






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






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