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. Constant vs variable






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






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






4. 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






5. Usually a firm's largest expenditure






6. Customers demand for finished goods






7. 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






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






9. 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






10. 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






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






12. 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






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






14. 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)






15. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






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






19. Sacrificed in exchange for buying needed machines






20. Minimum rate of return expected on new investments






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






22. 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






23. 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






24. Single order vs repetitive order






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. Internal vs external






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






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






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






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






31. Perpetual vs periodic






32. 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)






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






34. 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






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






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






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






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






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






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






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






43. Associated insurance cost - associated taxes






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






45. Constant vs variable - independent vs dependent






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






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






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






49. Display inventory carried to increase product visibility stimulate demand






50. Demands - replenishments - constraints - and costs