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






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






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






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






5. Constant vs variable - independent vs dependent






6. 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)






7. Constant vs variable






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






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






10. Internal vs external






11. 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






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






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






14. 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






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






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






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






18. 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






19. 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






20. Perpetual vs periodic






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






22. 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






23. 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






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






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






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






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






28. Display inventory carried to increase product visibility stimulate demand






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






30. Usually a firm's largest expenditure






31. Minimum rate of return expected on new investments






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






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






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






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






36. 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)






37. 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






38. Single order vs repetitive order






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






40. 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






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






42. 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






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






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






45. 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






46. Often everybody's concern - but nones responsibility






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






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






49. 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






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