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. 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)






2. 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






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






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






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






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






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






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






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






10. Minimum rate of return expected on new investments






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






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. 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






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






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






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






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






18. 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






19. Demands - replenishments - constraints - and costs






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






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






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






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






24. Internal vs external






25. 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






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






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






28. Single order vs repetitive order






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






30. 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






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






32. Often everybody's concern - but nones responsibility






33. 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






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






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






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






37. Associated insurance cost - associated taxes






38. 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






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






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






41. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






44. Perpetual vs periodic






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






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






47. Constant vs variable - independent vs dependent






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






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






50. Have most complex and difficult inventory problems