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. 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






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






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






4. Demands - replenishments - - constraints - and costs






5. 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






6. Minimum rate of return expected on new investments






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






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






9. Demands - replenishments - constraints - and costs






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






11. 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






12. Internal vs external






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






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






15. 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






16. 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)






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






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






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






20. 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






21. Associated insurance cost - associated taxes






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






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






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






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






26. 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






27. 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)






28. Usually a firm's largest expenditure






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






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






31. Single order vs repetitive order






32. Often everybody's concern - but nones responsibility






33. 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






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






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






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






37. 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)






38. 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






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






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






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






42. 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






43. 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






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






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






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






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






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






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






50. 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