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. Demands - replenishments - - constraints - and costs






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






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






4. Usually a firm's largest expenditure






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






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






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






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






9. 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






10. 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






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






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






13. 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)






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






15. 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






16. 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






17. Often everybody's concern - but nones responsibility






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






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






21. Associated insurance cost - associated taxes






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






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






24. Display inventory carried to increase product visibility stimulate demand






25. 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






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






27. Time factor - discontinuity factor - uncertainty factor - economy factor






28. 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)






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






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






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






32. 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






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






34. Have most complex and difficult inventory problems






35. 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






36. 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






37. Internal vs external






38. 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






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






40. Perpetual vs periodic






41. Customers demand for finished goods






42. 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)






43. 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






44. 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






45. 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






46. Minimum rate of return expected on new investments






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






48. Sacrificed in exchange for buying needed machines






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






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