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






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






3. 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






4. Associated insurance cost - associated taxes






5. 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






6. 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






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)






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






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






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






11. 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






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






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






14. Minimum rate of return expected on new investments






15. 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






16. 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






17. 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






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






19. Customers demand for finished goods






20. Usually a firm's largest expenditure






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






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






23. Constant vs variable






24. 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






25. 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)






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






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






28. 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






29. 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






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






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






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






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






34. 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)






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






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






37. 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






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






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






40. Often everybody's concern - but nones responsibility






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






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






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






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






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






46. 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






47. 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






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






49. 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






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