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. 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)






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






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






4. 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






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






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






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






8. Associated insurance cost - associated taxes






9. Perpetual vs periodic






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






11. 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






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






13. Customers demand for finished goods






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






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






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






17. Constant vs variable






18. Demands - replenishments - constraints - and costs






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






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






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






22. What purpose does inventory serve? working stock - anticipation stock (seasonal stock) - safety (buffer) stock - pipeline stock - decoupling stock - psychic stock






23. 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






24. Often everybody's concern - but nones responsibility






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






26. 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






27. 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






28. 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






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






30. 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






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






32. Display inventory carried to increase product visibility stimulate demand






33. 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






34. 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)






35. Time factor - discontinuity factor - uncertainty factor - economy factor






36. 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)






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. Minimum rate of return expected on new investments






39. 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






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






41. Have most complex and difficult inventory problems






42. 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






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






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






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






46. Constant vs variable - independent vs dependent






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






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






49. 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






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