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. 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






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






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






4. 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






5. Have most complex and difficult inventory problems






6. 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and deterministic vs unknown vs probabilistic) 2) rate (def size over a period of time) 3) pattern (how demand is withdrawn from inventory - be






7. 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)






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






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






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






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






12. 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






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






14. Display inventory carried to increase product visibility stimulate demand






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






16. Often everybody's concern - but nones responsibility






17. Minimum rate of return expected on new investments






18. 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)






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






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






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






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






23. 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






24. 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






25. 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






26. 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






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






28. Customers demand for finished goods






29. Associated insurance cost - associated taxes






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






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






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






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






34. Perpetual vs periodic






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






36. 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






37. 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)






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






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






40. Demands - replenishments - constraints - and costs






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






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. 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






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






45. Demands - replenishments - - constraints - and costs






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






47. 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






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






49. Usually a firm's largest expenditure






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