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






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






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






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






5. 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






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






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






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






9. 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






10. 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






11. 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)






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






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






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






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






16. Usually a firm's largest expenditure






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






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. Have most complex and difficult inventory problems






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






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






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






23. 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






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






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






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






27. Demands - replenishments - constraints - and costs






28. Perpetual vs periodic






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






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






31. Minimum rate of return expected on new investments






32. Time factor - discontinuity factor - uncertainty factor - economy factor






33. Demands - replenishments - - constraints - and costs






34. Associated insurance cost - associated taxes






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






36. 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






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






38. Constant vs variable






39. Internal vs external






40. Sacrificed in exchange for buying needed machines






41. 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






42. 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






43. 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






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






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






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






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






48. 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)






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






50. 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)