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. 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






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






3. Display inventory carried to increase product visibility stimulate demand






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






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






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






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






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






9. 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)






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






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






12. 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






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






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






15. 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






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






17. Have most complex and difficult inventory problems






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






19. Customers demand for finished goods






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






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






22. Perpetual vs periodic






23. Single order vs repetitive order






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






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






26. 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






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






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






29. Demands - replenishments - - constraints - and costs






30. 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






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






32. 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






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






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






35. 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






36. 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)






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






38. 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)






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






40. 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






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






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






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






44. Sacrificed in exchange for buying needed machines






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






46. Time factor - discontinuity factor - uncertainty factor - economy factor






47. Minimum rate of return expected on new investments






48. Often everybody's concern - but nones responsibility






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






50. 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