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 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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






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






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






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






6. Usually a firm's largest expenditure






7. 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)






8. 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






9. 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






10. 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






11. Constant vs variable - independent vs dependent






12. Internal vs external






13. Often everybody's concern - but nones responsibility






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






15. 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






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






17. 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)






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






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






20. 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






21. Customers demand for finished goods






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






23. Constant vs variable






24. 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






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






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






27. 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






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






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






30. Have most complex and difficult inventory problems






31. 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






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






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






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






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






36. 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






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






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






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






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






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






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






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






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






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






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






47. 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






48. Demands - replenishments - - constraints - and costs






49. 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)






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