Inventory Management
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Avg score: 81% • Most missed: “Production does not need to be geared directly to this; it is not faced to adapt…”
Inventory Management
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25 Questions

1. Display inventory carried to increase product visibility stimulate demand

2. Customers demand for finished goods

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

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

5. 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

6. Minimum rate of return expected on new investments

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

8. 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

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

10. 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

11. Time factor - discontinuity factor - uncertainty factor - economy factor

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

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

14. 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

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

16. 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

17. 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

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

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

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

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

22. 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

23. Constant vs variable

24. 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

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

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