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






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






3. 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






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






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






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






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






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






9. 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)






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






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






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






13. 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






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






15. Perpetual vs periodic






16. Internal vs external






17. 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






18. Often everybody's concern - but nones responsibility






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






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






21. 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






22. 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






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






24. 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






25. Usually a firm's largest expenditure






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






27. 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






28. 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






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






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






31. Minimum rate of return expected on new investments






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






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






34. 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






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






36. Display inventory carried to increase product visibility stimulate demand






37. 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






38. 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






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






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






41. 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)






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






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






44. Have most complex and difficult inventory problems






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






46. Demands - replenishments - - constraints - and costs






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






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






49. 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)






50. Associated insurance cost - associated taxes