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






2. 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






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






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






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






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






7. Minimum rate of return expected on new investments






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






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






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






11. Sacrificed in exchange for buying needed machines






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






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






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






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






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






17. Internal vs external






18. 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






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






20. Constant vs variable






21. 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






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






23. 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






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






25. Perpetual vs periodic






26. Have most complex and difficult inventory problems






27. 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






28. 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






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






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






31. 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






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






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






34. 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






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






36. 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)






37. 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






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






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






40. Usually a firm's largest expenditure






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






42. Customers demand for finished goods






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






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






45. 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)






46. Associated insurance cost - associated taxes






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






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






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






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