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






2. 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






3. 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






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






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






6. Customers demand for finished goods






7. Usually a firm's largest expenditure






8. 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






9. 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






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






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






12. Minimum rate of return expected on new investments






13. Constant vs variable






14. Constant vs variable - independent vs dependent






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






16. 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






17. Internal vs external






18. Perpetual vs periodic






19. 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)






20. 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






21. Associated insurance cost - associated taxes






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






23. Demands - replenishments - constraints - and costs






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






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






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






27. 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)






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






29. 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






30. Often everybody's concern - but nones responsibility






31. 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






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






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






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






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






36. 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






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






38. Display inventory carried to increase product visibility stimulate demand






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






40. Demands - replenishments - - constraints - and costs






41. Time factor - discontinuity factor - uncertainty factor - economy factor






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






43. Single order vs repetitive order






44. Sacrificed in exchange for buying needed machines






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






46. Have most complex and difficult inventory problems






47. 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






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






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






50. 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