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. 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)






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






3. 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






4. Customers demand for finished goods






5. 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






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






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






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






9. Internal vs external






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






11. 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)






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






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






14. Often everybody's concern - but nones responsibility






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






16. Demands - replenishments - constraints - and costs






17. 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






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






19. 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






20. Single order vs repetitive order






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






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






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






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






25. 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






26. 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)






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. Constant vs variable






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






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






31. Perpetual vs periodic






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






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






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






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






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






37. 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






38. 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






39. 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






40. Constant vs variable - independent vs dependent






41. 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






42. Usually a firm's largest expenditure






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






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






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






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






47. Have most complex and difficult inventory problems






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






49. Sacrificed in exchange for buying needed machines






50. Final product - available for storage - distribution - or sale; isolate the customer from the producer