Inventory Management Quiz

Test your knowledge of inventory management with this quiz. Learn about the 4 types of inventory controls, how to calculate inventory turnover, and the importance of matching inventory levels with customer demand. Understand the integral role of inventory management in the supply chain and its impact on business operations.

Created by

@HilariousAwe

Questions and Answers

Every quiz on Quizgecko comes with Questions, Flashcards and Study notes to help you learn optimally. Sign up free now.

What are the 4 types of inventory controls?

Overstocks, Out-of-stocks, Shrinkage, Turnover

What does low turnover indicate in terms of inventory?

Overstock

What does high turnover indicate in terms of inventory?

Frequent out-of-stock

What does the inventory turnover formula calculate?

The number of times a business sells its inventory in one year Signup and view all the answers

What is the impact of running out of inventory (out-of-stock)?

Loss of sales and potential customer dissatisfaction Signup and view all the answers

What is the impact of overstocking inventory?

Increases storage costs and ties up capital Signup and view all the answers

What is the purpose of effective inventory management in relation to shrinkage?

Prevents breakage, damage, and theft Signup and view all the answers

What does old stock depreciation emphasize in inventory management?

The need to reduce prices to clear old stock Signup and view all the answers

What is the primary factor in determining how much of a product a business needs and when they need it?

Matching inventory levels with customer demand Signup and view all the answers

Study Notes

Inventory Control Types

There are four types of inventory control: manual, perpetual, periodic, and just-in-time (JIT) systems.

Inventory Turnover Indicators

Low inventory turnover indicates slow-moving or obsolete stock, resulting in storage costs and potential waste.
High inventory turnover indicates fast-moving stock, suggesting efficient sales and restocking strategies.

Inventory Turnover Formula

The inventory turnover formula calculates the number of times inventory is sold and replaced within a given period.

Consequences of Inventory Management

Running out of inventory (out-of-stock) can lead to lost sales, customer dissatisfaction, and potential loss of market share.
Overstocking inventory can result in storage costs, obsolescence, and potential waste.

Effective Inventory Management

Effective inventory management aims to minimize shrinkage, which includes theft, damage, and administrative errors.

Inventory Depreciation

Old stock depreciation emphasizes the importance of regularly reviewing and clearing out outdated or slow-moving inventory to optimize storage space and minimize waste.

Determining Inventory Needs

The primary factor in determining how much of a product a business needs and when they need it is demand forecasting, which involves analyzing sales trends and seasonal fluctuations.