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 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






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






3. 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






4. Sacrificed in exchange for buying needed machines






5. 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)






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






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






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






9. 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






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






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






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






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






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






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






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






18. 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






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






20. Associated insurance cost - associated taxes






21. 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






22. Have most complex and difficult inventory problems






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






24. 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






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






26. Often everybody's concern - but nones responsibility






27. 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






28. 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






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






30. 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)






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






32. 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






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






34. 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






35. Minimum rate of return expected on new investments






36. 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)






37. Demands - replenishments - constraints - and costs






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






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






40. Constant vs variable - independent vs dependent






41. Display inventory carried to increase product visibility stimulate demand






42. 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






43. Time factor - discontinuity factor - uncertainty factor - economy factor






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






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






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






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






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. Constant vs variable






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