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






2. 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






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






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






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






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






7. Constant vs variable






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






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






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 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






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






13. 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






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






15. Perpetual vs periodic






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






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






18. 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






19. 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






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






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






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






23. Associated insurance cost - associated taxes






24. Usually a firm's largest expenditure






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






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






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






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






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






30. 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






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






32. Constant vs variable - independent vs dependent






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






34. 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






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






36. Have most complex and difficult inventory problems






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






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






39. 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






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






41. 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






42. Display inventory carried to increase product visibility stimulate demand






43. 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






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






45. Internal vs external






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






47. Sacrificed in exchange for buying needed machines






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






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






50. 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