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






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






3. 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






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






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






6. Internal vs external






7. 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






8. Associated insurance cost - associated taxes






9. 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






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






11. Have most complex and difficult inventory problems






12. Sacrificed in exchange for buying needed machines






13. Often everybody's concern - but nones responsibility






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






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






16. 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






17. Demands - replenishments - - constraints - and costs






18. Perpetual vs periodic






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






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






21. 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






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






23. 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)






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






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






26. 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






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






28. Constant vs variable






29. Time factor - discontinuity factor - uncertainty factor - economy factor






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






31. 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






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






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






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






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






36. 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






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






38. 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






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






40. 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






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






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






43. 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






44. 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






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






46. 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






47. Constant vs variable - independent vs dependent






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






49. Minimum rate of return expected on new investments






50. 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