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. Customers demand for finished goods






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






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






4. 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






5. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






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






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






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






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






12. 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






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






14. 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






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






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






17. Demands - replenishments - - constraints - and costs






18. Sacrificed in exchange for buying needed machines






19. 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






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






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






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






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






24. 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)






25. 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






26. 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






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






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






29. 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






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






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






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






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






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






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






36. Have most complex and difficult inventory problems






37. 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)






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






39. 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)






40. Associated insurance cost - associated taxes






41. Internal vs external






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






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






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






46. Display inventory carried to increase product visibility stimulate demand






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






48. Constant vs variable






49. 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






50. 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