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 purchased to be USED in the production process; they will be modified or transformed into the final product; isolate the supplier and the user






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






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






4. 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






5. Internal vs external






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






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






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






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






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






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






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






13. 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






14. Demands - replenishments - constraints - and costs






15. Perpetual vs periodic






16. 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






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






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






19. Have most complex and difficult inventory problems






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






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






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






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






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






25. 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






26. 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






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






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






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






30. 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






31. 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






32. 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)






33. Display inventory carried to increase product visibility stimulate demand






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






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






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






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






38. 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






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






40. Constant vs variable






41. Usually a firm's largest expenditure






42. Often everybody's concern - but nones responsibility






43. 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






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






45. 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)






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






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






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






49. 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)






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