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. 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






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






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






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






6. Associated insurance cost - associated taxes






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






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






9. 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






10. Perpetual vs periodic






11. 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






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






13. 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)






14. 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)






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






16. 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






17. Constant vs variable






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






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






20. 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






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






22. Often everybody's concern - but nones responsibility






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






24. Usually a firm's largest expenditure






25. Have most complex and difficult inventory problems






26. 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)






27. Demands - replenishments - constraints - and costs






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






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






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






33. Sacrificed in exchange for buying needed machines






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






35. Internal vs external






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






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






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






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






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






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






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






43. 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






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






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






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






47. Display inventory carried to increase product visibility stimulate demand






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






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






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