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






2. 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






3. 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






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






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






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






7. Internal vs external






8. 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






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






10. Constant vs variable - independent vs dependent






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






12. 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






13. Single order vs repetitive order






14. Often everybody's concern - but nones responsibility






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






16. Demands - replenishments - - constraints - and costs






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






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






19. 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)






20. Customers demand for finished goods






21. Demands - replenishments - constraints - and costs






22. Constant vs variable






23. Usually a firm's largest expenditure






24. 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






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






26. 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)






27. 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






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






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






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






31. 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






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






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






34. Have most complex and difficult inventory problems






35. Sacrificed in exchange for buying needed machines






36. 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






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






38. 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






39. 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)






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






41. 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






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






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






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






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






46. 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






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






48. Associated insurance cost - associated taxes






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






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