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1. What are the three phases in the inventory management cycle?
Active, Passive, Obsolete.
Component Part, Subassembly, Finished Assembly.
Raw Material, Work in Process, Finished Goods.
2. What is the best technique for optimizing the amount of Work in Process inventory?
Apply LEAN manufacturing principles.
Use ERP scheduling programs.
Use preferred suppliers and fixed priced contracting.
3. Under what conditions would finished goods inventory that have been shipped to a customer still be carried as an asset on the company’s Balance Sheet?
It is carried on the company’s Balance Sheet if it is still owned by the company but pre-positioned at the customer for their instant use when they need it.
It is carried on the Balance Sheet of the company if it is a new product and the company has not yet done a formal market launch.
Never, when finished goods inventory is shipped to the customer it is recorded as a sale and is not carried as an asset on the Balance Sheet.
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