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. 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. Perpetual vs periodic






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






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






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






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






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






9. 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






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






11. 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






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






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






14. 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






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






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






17. 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)






18. Constant vs variable - independent vs dependent






19. Display inventory carried to increase product visibility stimulate demand






20. 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






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






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. Associated insurance cost - associated taxes






24. Often everybody's concern - but nones responsibility






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






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






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






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






29. 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)






30. Minimum rate of return expected on new investments






31. 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)






32. 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






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






34. Sacrificed in exchange for buying needed machines






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






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






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






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






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






40. Demands - replenishments - - constraints - and costs






41. 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






42. 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






43. 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






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






45. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






48. Constant vs variable






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






50. Internal vs external