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






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






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






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






5. Display inventory carried to increase product visibility stimulate demand






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






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






8. 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






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






10. Constant vs variable - independent vs dependent






11. 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






12. 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






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






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






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






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






17. Internal vs external






18. 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






19. 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)






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






21. Time factor - discontinuity factor - uncertainty factor - economy factor






22. 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






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






24. Single order vs repetitive order






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






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






27. Minimum rate of return expected on new investments






28. Sacrificed in exchange for buying needed machines






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






30. Repetiveness - source of supply - type of demand - type of lead time - type of 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. The cost associated with a foregone alternative use of the capital - that is - the benefits that could have been obtained from that alternative






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






34. 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






35. Have most complex and difficult inventory problems






36. 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






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. Demands - replenishments - - constraints - and costs






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






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






41. 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)






42. 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






43. 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)






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






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






46. 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)






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






48. 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






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






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