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Test your basic knowledge |
Inventory Management
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Study First
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. 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
Different departments in a firm
Stock out costs
Second phase
Decoupling stock
2. It takes time to make a product - but consumers want them on demand
Types of inventory costs
Time Factor
Major components of inventory carrying cost
Pipeline stock
3. Purchase economies - production economies - transportation economies - hedging against increasing materials cost - smooth production and stabilize manpower levels when seasonality is an issue
Economic Factors
Purchasing discounts
Initial phase of inventory flow
Source of supply
4. 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
Material costs
Pipeline stock
Inventory/materials manager
Inventory flow
5. 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
Inventory flow
Benefits of inventory/material manager
Type of lead time
Order cost or set up cost
6. Demands - replenishments - constraints - and costs
Consumption
Major properties of inventory
Material costs
Supplies inventory
7. 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)
Sub goals of inventory management
Order cost or set up cost
Reasons why inventory exists
Finished Goods Inventory
8. Usually a firm's largest expenditure
Contraints
Material costs
Order cost or set up cost
Additional phases
9. Fewer department conflicts - less sub optimization - consolidation of activities - single source of accountability
Stock out costs
Benefits of inventory/material manager
Inventory service cost
Pipeline stock
10. Cost of the facility - material handling (labor and energy) - maintenance cost - and some utility cost
Third phase
Purchase costs
Storage space costs
Major components of inventory carrying cost
11. If the firm uses a warehouse or distributor centers - there must be additional pools of finished inventory
Costs
Major properties of inventory
Inventory carrying cost
Additional phases
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
Reasons why inventory exists
Responsibility
Major properties of inventory
Order cost or set up cost
13. Repetiveness - source of supply - type of demand - type of lead time - type of inventory system
Decoupling stock
Classifying inventory problems
Storage space costs
Contraints
14. 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
Less inventory
Psychic stock
Types of inventory
Inventory/materials manager
15. Repetiveness - source of supply - type of demand - type of lead time - type of inventory
Order cost or set up cost
Classifying inventory problems
How are inventory problems classified
Supplies inventory
16. 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
Inventory service cost
Raw Materials Inventory
Onventory management
Growing companies
17. Display inventory carried to increase product visibility stimulate demand
Inventory risk cost
Psychic stock
Inventory risk cost
Types of inventory
18. Often everybody's concern - but nones responsibility
Second phase
Onventory management
Anticipation stock (seasonal stock)
Basic types of inventory
19. As items are completed - they enter another pool-finihsed goods - this pool must be controlled with regard to external demand
Capital cost
Third phase
Properties of inventory
Inventory risk cost
20. Single order vs repetitive order
Repetiveness
Order cost or set up cost
Inventory carrying cost
Responsibility
21. As you move up in the supply chain...
Inventory
Types of inventory costs
Problems become more complex
Type of demand
22. The cost of issuing a purchase order/placing an order if obtained externally - the cost of setting up production if made in house
Type of lead time
Order cost or set up cost
Supplies inventory
Classifying inventory problems
23. 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)
Costs
Source of supply
Driving force behind the flow
Growing companies
24. Associated insurance cost - associated taxes
Problems become more complex
Inventory service cost
Inventory/materials manager
Supplies inventory
25. Limitations placed on inventory systems - ex: space constraints - capital - facility - equipment - personal - management policies and administrative decisions
Manufacturers
Contraints
Storage space
Type of demand
26. Allows one part of the system to be isolated from the next
Decoupling stock
Safety stock (buffer stock)
Capital costs (opportunity costs)
Time Factor
27. 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
Major properties of inventory
Economic Factors
Raw Materials Inventory
Inventory carrying cost
28. 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
Additional phases
Raw Materials Inventory
Inventory risk cost
Cost accumulation
29. Often short on cash because what little they have they devote to growth
Third phase
Growing companies
Hurdle rate
Discontinuity Factor
30. Supplies - raw materials - in process goods - and finished goods
Source of supply
Finished Goods Inventory
Basic types of inventory
Inventory risk cost
31. Run out of material or supplies - production stopping - deadlines not met
Safety stock (buffer stock)
Internal shortage
Uncertainty Factors
Replenishments
32. Production does not need to be geared directly to this; it is not faced to adapt to the necessities of production
Goals of inventory management
Consumption
External shortage
Reasons why inventory exists
33. Inventory held in reserve to protect against uncertainty - reasons for carrying: uncertainty around customer demand - delays or disruptions in supply
Material costs
Safety stock (buffer stock)
Problems become more complex
Time Factor
34. Constant vs variable - independent vs dependent
Storage space costs
Type of demand
Problems become more complex
Supplies inventory
35. Items consumes in the normal functioning of a firm that are NOT part of the final product; ex: pencils - light bulbs - drill bits - paper
Stock out costs
Inventory/materials manager
Supplies inventory
Less inventory
36. Units put into inventory - can be classified by: size - pattern - lead time (time between order and addition to inventory - constant vs variable)
Third phase
Driving force behind the flow
Type of lead time
Replenishments
37. Time factor - discontinuity factor - uncertainty factor - and economic factor
The categorization of inventory by the purpose that it serves
Inventory service cost
Problems become more complex
The categorization of inventory by reasons for its existence
38. Often a lot of conflict when it comes to inventory decisions - sub optimization problems (managers only looking out for their own departments)
Purchase costs
Psychic stock
Different departments in a firm
Inventory management
39. The stock of materials on hand at a given time and the unutilized assets waiting for sale or use
Inventory management
Functional factors to explain why inventory exists
Economic Factors
External shortage
40. 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
Finished Goods Inventory
Inventory
Internal shortage
Contraints
41. Involves controlling the flow of materials into and out of a system - a big timing problem
Material costs
Inventory management
Purchasing discounts
Type of demand
42. Minimum rate of return expected on new investments
Inventory risk cost
Less inventory
Anticipation stock (seasonal stock)
Hurdle rate
43. Purchase - oder cost or set up cost - stock out cost - and inventory holding costs (aka inventory carrying costs)
Economic Factors
Costs
Inventory carrying cost
Types of inventory costs
44. 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
Classification of Inventory item
Internal shortage
Demands
Functional classifications
45. Have most complex and difficult inventory problems
Types of inventory
Manufacturers
Types of inventory costs
Inventory service cost
46. Supplies - raw materials - in-processed goods - finished goods
Supplies inventory
Types of inventory
Demands
Consumption
47. Gives firms a competitive advantage due to lower costs and greater flexibility
Problems become more complex
Order cost or set up cost
Less inventory
Type of inventory system
48. What purpose does inventory serve? working stock - anticipation stock (seasonal stock) - safety (buffer) stock - pipeline stock - decoupling stock - psychic stock
Sub goals of inventory management
Properties of inventory
Functional classifications
Anticipation stock (seasonal stock)
49. Includes cost of obsolescence (equal to the original cost-salavage cost) - damage cost - and shrinkage (theft) cost
Reasons why inventory exists
Replenishments
Inventory/materials manager
Inventory risk cost
50. A customers order cannot be met - backorder costs - present profit loss - future profit loss
Repetiveness
External shortage
Source of supply
Benefits of inventory/material manager