1. Explain me what is lead time?
Lead time is the period of time from which a order for goods is placed until it is received by the store. Lead time is an important consideration for determining when orders should be placed.
2. Tell me do You Know When Should A Physical Inventory Be Taken?
A inventory should be taken at least once a year. If items are perishable, seasonal or highly demanded a inventory should be taken more often.
3. Tell us what is the EOQ formula?
The EOQ formula is the square root of 2 times demand times order completion cost divided by carrying cost. The mathematical formula is square root of 2DS/C.
4. Explain me what types of forecasting can I do?
There are two types of forecasting qualitative and quantitative. Qualitative uses personal opinions to determine forecasts. Quantitative uses numerical data and statistical modeling to determine forecasts.
Demand is the quantity that customers are willing to buy. Demand can be found through forecasting and is needed to find the EOQ level.
6. Explain me can Forecasting Help In Controlling Inventory?
Yes, through the use of forecasts inventory levels can be set to meet the demands while keeping levels as low as possible.
7. Tell us do I need to recompute stocking costs for the EOQ level?
Yes, in order to compare stock costs when using the EOQ model you must compute the costs for both the original level and the EOQ level of order quantities.
8. Tell me if I get a discount will it effect the EOQ model?
Yes, a discount will cause the basic EOQ model to fail. To use a discount in determine a EOQ you must use the EOQ model with quantity discounts.
9. Please explain what do the letters in the EOQ and stocking cost formula stand for?
The letters in the formulas represent the quantity ordered(Q), the carrying cost of a unit(C), the demand for the units(D) and the cost of completing a order(S).
10. Tell us what if there is no savings or the models produce even results?
If there is no savings a error in the calculations may have occurred or the model does not fit your case. For instances were the total stocking costs are even you may use either order quantity.
11. Please explain what should be recorded in a physical count of inventory?
When conducting a physical inventory the classification, location and number in stock of a good should be recorded.
12. Tell us can A Computer Help In Forecasting Future Demand?
Yes, In the market today there are many computer software packages that can compute forecasted demand for goods held in inventory.
13. Tell us is Gr/ir Account Related To Inventory?
If you are involved with inventory, then you need the GR/IR account (Inventory Account) when the IR is posted.
If you are not involved about inventory, then the system does not need the GR/IR account when the IR is posted, the system needs a G/L instead of the GR/IR account.
14. Tell me what is interference?
Interference is a factor in forecasting demand. Interference is made up of all the factors that a forecaster has no control over. Factors that may be considered interference include natural disasters, unusual customer demands, or rare events in the business period.
15. Explain me what are the important considerations in inventory control?
For inventory control to work at its best a store must consider the costs of acquisition, carrying, ordering, and stock-out. the store must also look at its reordering system, its budgeting for inventory, insurance and forecasted demand.
16. Do you know what Makes A Good Forecasting Model?
A good forecast model will have reasonable costs. the accuracy of its forecasts will allow good decision making. The model will have ample data available for its use and a relevant time span. The model finally will have a low interference level.
17. Tell me what Are Finished Goods?
Inventories are those completely manufactured products which are ready for sale. Stocks of raw materials and work-in-process facilitate production, while stock of finished goods is required for smooth marketing operations. Thus, inventories serve as a link between the production and consumption of goods.
18. Tell me how do you determine the numbers to use in the EOQ formula?
To determine which numbers to use you must look for the following items. The number of items per order is the quantity(Q). The number of items that can be sold is D. D may be the forecast demand for that particular good. The cost of placing the order is used for S. The final number to find is the carrying cost(C) which is the cost of the item to be held in inventory.
19. Do you know what is inventory control?
Inventory control is the process of reducing inventory costs while remaining responsive to customer demands. By this definition a store would want to lower its acquisition, carrying ordering and stock-out costs to their lowest possible levels. However a store would need to have enough inventories to meet any needs of its customers.
20. Explain me what makes EOQ work for inventory control?
The EOQ works if its four assumptions match the case it is used on. The assumptions are: A. Annual demand, carrying costs and ordering costs can be estimated. B. Inventory level is divided by 2, no safety stock, goods used uniformly and are gone by next order. C. Stock-out, customer responsiveness and other costs not considered. D. No quantity discounts.
21. Explain me what makes a good forecasting model?
A good forecast model will have reasonable costs. the accuracy of its forecasts will allow good decision making. The model will have ample data available for its use and a relevant time span. The model finally will have a low interference level.
One of the most common mistakes made by supply organizations is looking at only a small subset of all inventory-the finished goods sitting in major warehouses-even though raw materials, works in process, spare parts and even goods in retail stores can make up 50 percent of the total. As a result, they miss potential savings. An organizational map of all inventories will help better prioritize ways to reduce inventories. And all the inventory techniques we've discussed apply.
23. Tell me what Are The Types Of Reordering Systems That Can Be Used In Inventory Control?
There are several types of reordering systems, in this module we discussed three. The fixed order quantity uses fixed quantities of goods ordered at various order points to replenish inventory.
The fixed order period use fixed times of reorder with various order quantities to replenish inventory to preset levels. The final system, just in time uses a constant flow of goods to match the level of demand.
24. Tell us what are the types of reordering systems that can be used in inventory control?
There are several types of reordering systems, in this module we discussed three. The fixed order quantity uses fixed quantities of goods ordered at various order points to replenish inventory. The fixed order period use fixed times of reorder with various order quantities to replenish inventory to preset levels. The final system, just in time uses a constant flow of goods to match the level of demand.
25. Do you know when should reorders be placed?
Times for reordering goods vary dependent on the control system you use and its lead time. In fixed order quantities reorders should be placed when the safety stock is reached. In fixed period systems the reordering is done at set time periods. In just in time systems reordering is based on matching the demand with supply. For just in time a close watch on inventory levels is needed so that reorders are placed before goods are out of stock.
Typically, excess and obsolete stock stems from ineffective sales forecasting, planning or using a business model that fails to factor in product complexity and life cycles correctly. Inventory leaders establish processes to determine why excesses are being created and then develop a plan of action to sell it off. In some instances, the fear of the write-off has led to a large buildup over time of obsolete inventory.
Ideally, there are two factors: companies should consider calculations that minimize the overall cost such as inventory and changeover costs. They also should base frequency on negotiations between the different parties involved and factor in upcoming events such as promotions and uncertainties like bad weather.
28. Tell us how To Determine The Numbers To Use In The Eoq Formula?
To determine which numbers to use you must look for the following items. The number of items per order is the quantity(Q). The number of items that can be sold is D. D may be the forecast demand for that particular good. The cost of placing the order is used for S. The final number to find is the carrying cost(C) which is the cost of the item to be held in inventory.
29. Basic Inventory Manager Job Interview Questions:
☛ If you discovered an inventory error, how would you act?
☛ Imagine one of your orders wasn't delivered on time creating a risk that the inventory would be soon inadequate to cover demand. How do you resolve this? How do you protect inventory from such occurrences?
☛ If I asked you to conduct forecasting analysis to optimize our inventory, how would you go about it?
☛ How good are you in math on a scale from 1 to 10?
☛ Are you familiar with cycle counting? Why would you use it?
☛ How is EOQ important and how do you use it?
☛ How do you calculate the value of inventory?
☛ Have you used ABC analysis of inventory control? Can you explain it to me?
☛ What do you know of Material Requirements Planning (MRP) systems?
☛ What do you think COGS means to our business?
☛ How do you ensure accuracy in documenting inventory?
☛ Tell me what you did to ensure inventory meets quality standards in your previous job
☛ Recall a time when you implemented an optimized procedure for inventory management
☛ Describe a time you showed excellent leadership
☛ Tell me about a time you had a conflict with the logistics or accounting department. How did you resolve it?
30. Inventory Management Based Job Interview Questions:
☛ Can I have a copy of your policies and procedures?
☛ Which inventory cost-flow method do you use for operational and financial purposes?
☛ How is inventory classified? Do you utilize bar coding or scanning equipment?
☛ How are raw material, work-in-progress (WIP) and finished goods stored and monitored?
☛ How are location numbers assigned? Outline of location number definitions?
☛ What systems are used for monitoring the distribution of inventory? Does the system interface with all of the plants – or do the plants manually submit inventory updates to accounting?
☛ What are the procedures followed to verify current inventory levels and managing inventory needed for upcoming work orders?
☛ How do you identify, value, and dispose of obsolete, damaged, and/or slow-moving inventory?
☛ How do you determine appropriate reserves and safety stock levels?
☛ Cycle counts
☛ How often are cycle counts performed?
☛ What products are given priority or a low variance threshold?
☛ Are cycle counts performed for raw materials, WIP and finished goods?
☛ Are random cycle counts periodically conducted?
☛ What is the process followed to perform inventory counts?
☛ Who is responsible for conducting the cycle counts (independent of accounting function)?
☛ How are the employees trained to perform this function?
☛ Have policies/procedures/instructions for cycle counts been established and documented?
☛ Who performs the validation of the counts (should be independent of receiving/production functions)? Any approvals required?
☛ What are the documentation requirements for the cycle counts?
☛ Are the cycle count documents pre-numbered to keep track of all outstanding documents?
☛ How are cycle counted items marked?
☛ What is the process followed to research and resolve discrepancies if any are noted during the cycle count process?
☛ What is the variance threshold above which items must be researched?
☛ Are the causes of the discrepancies tracked and evaluated?
☛ What is the single greatest cause of inventory errors? (Clerical error, equipment failure?)
☛ Who is responsible for making adjustments to the system for discrepancies noted during the cycle count process?
☛ Is an annual physical inventory performed?
31. Post-Production Based Inventory Manager Job Interview Questions:
☛ What is the process to close work orders?
☛ Are completed products reconciled to the originated work orders?
☛ If only part of the product is utilized, how is the partial usage recorded?
☛ How are scrap materials handled?
☛ What type of management reporting is performed?
☛ Are inventory performance metrics monitored on a regular basis?
32. Purchasing Based Inventory Manager Interview Questions:
☛ Can I have a copy of your policies and procedures?
☛ Can I have a copy of your organizational chart?
☛ Personnel
☛ Headcount and associated roles?
☛ Do purchasing personnel have access to the A/P system?
☛ Do purchasing personnel specialize in a product category for which they acquire goods?
☛ What is the system used for purchasing?
☛ Is the purchasing system electronically linked to the G/L, A/P, inventory, and supplier systems?
33. Production Based Inventory Manager Interview Questions:
☛ How are the actual materials, labor hours, and set up and run times monitored and recorded?
☛ Are the actual labor hours reviewed and approved by responsible management?
☛ What is the process followed if a customer calls to cancel an order?
☛ How is the product/inventory associated with that order handled?
☛ Sold off to other customers?
☛ How are these items recorded in the system?
☛ Are customers required to pay despite the order cancellation?
☛ How are work-in-progress (WIP) products evaluated for quality?
☛ What happens to a WIP item if it does not meet quality standards?
34. Placing the Order Based Inventory Manager Interview Questions:
☛ Do you practice vendor managed inventory – where the vendor is responsible for monitoring the inventory levels? How is the demand for inventory communicated to vendors?
☛ How are inventory needs communicated to the procurement department?
☛ Which department is responsible for monitoring material lead times, machine capacity, etc.?
☛ What is the process followed to place orders with vendors?
☛ What documentation and approvals are required?
☛ Are there system or process controls in place that would prevent the placement of an unauthorized purchase order?
☛ Has an authorization matrix been established to determine the level of management authorization that is required to place the order? Please provide a copy.
☛ How is the procurement department notified when inventory levels sink below threshold levels?
☛ Have threshold levels been established?
☛ How are inventory needs communicated to suppliers? (E-procurement, fax, phone, EDI, mail, system-automated)
☛ How is the purchasing process expedited (e.g. use of long term contracts, blanket purchase orders, etc.)?
☛ Who monitors open POs?
☛ Does anyone monitor purchasing activities?
☛ Indicate the number of suppliers that contribute 80% of total purchases.
☛ Office supplies & MRO (maintenance, repair, and operations) supplies
☛ Does anyone have procurement cards? Who?
☛ What are the authorized spending limits?
☛ Who orders office supplies and MRO supplies?
☛ Who approves the requisitions?
☛ Centralized purchasing?
35. Distribution Based Inventory Manager Job Interview Questions:
☛ Policies and procedures?
☛ What is the process followed to evaluate finished goods for quality control?
☛ What happens to items that do not pass quality standards?
☛ How is rejected material stored – in a separate/caged area?
☛ How are packing slips generated – system generated or manual?
☛ What type of management reporting is performed?
☛ Are inventory performance metrics monitored on a regular basis?
