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. 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






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






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






4. 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






5. Usually a firm's largest expenditure






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






7. 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






8. 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)






9. 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






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






11. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






14. 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






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






16. Customers demand for finished goods






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






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






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






20. 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






21. 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






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






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






24. Minimum rate of return expected on new investments






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






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






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






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






29. Perpetual vs periodic






30. 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)






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






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






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






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






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






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






37. 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






38. Internal vs external






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






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






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






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






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






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






46. 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






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






48. Often everybody's concern - but nones responsibility






49. Sacrificed in exchange for buying needed machines






50. Single order vs repetitive order