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CVPM Practice Questions by SB > Inventory > Flashcards

Inventory Flashcards

1
Q

Back Order

A

An order placed for a product that is temporarily out of stock

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2
Q

Controlled Drugs

A

Any drug or therapeutic agent commonly understood to include narcotics, with a potential for abuse or addiction, which is held under strict government control, as delineated by the Comprehensive Drug Abuse Prevention & Control Act passed in 1970

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3
Q

COGS Cost of Goods Sold

A

A figure on the income statement that reflects the cost of products sold to consumers in the primary business activity of the practice

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4
Q

Damaged Goods

A

A good that is unfit or reduced in value for its intended use due to damage of some sort

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5
Q

EOQ Economic Order Quantity

A

The most economical quality of a product to order, factoring in both holding and operating costs

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6
Q

Efficiency Ratio for Accounts Payable to Sales

A

Ratios used to analyze how well a company uses its assets and liabilities internally

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7
Q

Expired Inventory

A

Inventory that has reached the end of its useful life, and cannot be sold as a finished good.

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8
Q

FIFO First In - First Out

A

The principle by which the oldest inventory items are recorded as sold first, but do not necessarily mean that the exact oldest physical object has been tracked and sold

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9
Q

Inventory Audit

A

An accounting procedure used to keep track of products and merchandise

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10
Q

Inventory Turnover

A

The relationship between expense of total items sold and the inventory value, computed by dividing the costs of the drugs and the dispensed items by the average inventory value

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11
Q

Mark-up

A

The amount added to the cost price of goods to cover overhead and profit

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12
Q

Online Pharmacy

A

a pharmacy that operates over the internet and sends the orders to customers through the mail or shipping companies

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13
Q

Overstock

A

A supply or quantity in excess of demand or requirements

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14
Q

Pharmacy

A

A store where medicinal drugs are dispensed and sold

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15
Q

QOH Quantity on Hand

A

Total number of inventory units currently in stock

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16
Q

Shrinkage

A

Inventory loss, usually unexplained or difficult to isolate

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17
Q

Special Orders

A

Patient medications or food that is ordered by a client, typically because it is not kept in stock on a regular basis

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18
Q

Unit of Measure - or - buy/sell ratio

A

This is assigned to all inventory items and must be defined before a product can be entered into inventory. Each product will have a stocking unit of measure, sales ordering unit of measure and a purchasing unit of measure.

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19
Q

Volume Purchasing

A

The act of purchasing goods in multiple units or in large quantities, usually with a financial incentive for doing so.

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20
Q

Procurement

A

The act of obtaining or buying goods

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21
Q

Supply and Demand

A

The relationship between the product availability and the need of the consumer to purchase it

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22
Q

Inventory

A

all goods owned and held for sale or use in the regular course of business

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23
Q

Replacement Costs

A

The price that will have to be paid to replace an existing inventory asset with the same or similar product

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24
Q

Inventory Control
Optimal inventory control ensures that frequently used items are always available and that return on investment for carrying and managing inventory is at the highest possible level

A

The process whereby the need to maintain sufficient inventory to meet operating demands is weighed against the monetary cost of carrying the inventory.

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25
Q

Merchandise Inventory

A

products purchased for resale to clients

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26
Q

Medical Supply Inventory - AKA Professional Inventory

A

items used in the course of providing veterinary medical and surgical services

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27
Q

Just In Time

A

Receiving a product just as needed vs storing the product

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28
Q

a. Inventory Manager

A

A global role that is responsible for all the tasks associated with the other Inventory Management roles
a. Inventory Manager
b. Inventory Researcher
c. Department Lead
d. Inventory Receiver
e. Inventory Purchaser
f. Inventory Documenter and Tracker
g. Inventory Counter
f. Bookkeeper

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29
Q

b. Inventory Researcher

A

This person evaluates and selects suppliers and products
a. Inventory Manager
b. Inventory Researcher
c. Department Lead
d. Inventory Receiver
e. Inventory Purchaser
f. Inventory Documenter and Tracker
g. Inventory Counter
f. Bookkeeper

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30
Q

e. Inventory Purchaser

A

This person identifies product needs and places orders using the suppliers chosen by the Inventory Researcher

a. Inventory Manager
b. Inventory Researcher
c. Department Lead
d. Inventory Receiver
e. Inventory Purchaser
f. Inventory Documenter and Tracker
g. Inventory Counter
f. Bookkeeper

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31
Q

c. Department Lead

A

This role is responsible for identifying products needs within their specific department

a. Inventory Manager
b. Inventory Researcher
c. Department Lead
d. Inventory Receiver
e. Inventory Purchaser
f. Inventory Documenter and Tracker
g. Inventory Counter
f. Bookkeeper

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32
Q

d. Inventory Receiver

A

This person is trained to unpack, account for, and stock the shipments
a. Inventory Manager
b. Inventory Researcher
c. Department Lead
d. Inventory Receiver
e. Inventory Purchaser
f. Inventory Documenter and Tracker
g. Inventory Counter
f. Bookkeeper

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33
Q

f. Inventory Documenter and Tracker

A

This role documents the receipt of inventory, transfers of inventory, hospital use, shrinkage, etc in order to maintain accurate and up to date data in the practice management software
a. Inventory Manager
b. Inventory Researcher
c. Department Lead
d. Inventory Receiver
e. Inventory Purchaser
f. Inventory Documenter and Tracker
g. Inventory Counter
f. Bookkeeper

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34
Q

g. Inventory Counter

A

This person can be any employee who performs physical inventory counts
a. Inventory Manager
b. Inventory Researcher
c. Department Lead
d. Inventory Receiver
e. Inventory Purchaser
f. Inventory Documenter and Tracker
g. Inventory Counter
f. Bookkeeper

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35
Q

f. Bookkeeper

A

This person in responsible for the chart of accounts, entering costs of goods data, purchasing budgets, and reports
a. Inventory Manager
b. Inventory Researcher
c. Department Lead
d. Inventory Receiver
e. Inventory Purchaser
f. Inventory Documenter and Tracker
g. Inventory Counter
f. Bookkeeper

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36
Q

d. Unit/Product Cost

A

The total amount paid to vendor divided by the number of units ordered
a. Ordering Costs
b. Replacement Cost
c. Holding Costs
d. Unit/Product Cost

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37
Q

b. Replacement Cost

A

the price that will be paid to replace the inventory with the same or similar item
a. Ordering Costs
b. Replacement Cost
c. Holding Costs
d. Unit/Product Cost

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38
Q

a. Ordering Costs

A

Labor related expenses such as employee compensation, including benefits and taxes paid to employees to perform the various duties associated with ordering, receiving, unpacking, manage payment and records
a. Ordering Costs
b. Replacement Cost
c. Holding Costs
d. Unit/Product Cost

39
Q

c. Holding Costs

A

The costs invested in keeping the inventory on premises while waiting to use or sell. These costs include personal property tax, insurance, pharmacy licensing/DEA fees, utilities, loss due to expiration/waste/spoilage, OSHA regulations regarding safe handling of inventory, and routine product maintenance
a. Ordering Costs
b. Replacement Cost
c. Holding Costs
d. Unit/Product Cost

40
Q

True

A

True / False
Holding costs usually range from 8-15% of the true total cost. Combined ordering and holding costs account for approx 25-35% the total true cost

41
Q

False
If DVMs in the practice are paid on production and inventory is included in their commission, then allocation of a portion of their pay is considered an actual cost of inventory.

A

True / False
If DVMs in the practice are paid on production and inventory is included in their commission, then allocation of a portion of their pay would not be considered an actual cost of inventory.

42
Q

Control Functions

A

preparing and distributing written policies and procedures, creating and maintaining security and safety protocol, and regular monitoring of the system via counts and accountability. Needs to be flexible to change

43
Q

Perpetual Inventory System

A

A system that can provide an accurate idea of inventory quantities at any time. When items are received they are immediately added to the inventory records and when items are used or sold they are removed from the inventory records.

44
Q

Periodic Inventory System

A

a system that uses data from manual product counts at the end of every financial period

45
Q

Internal Controls

A

All measures, systems, and protocols used to prevent errors, waste and fraud with inventory.

46
Q

Physical Inventory Count

A

a process of manually counting quantities on hand

47
Q

c. Inventory

A

In Vet Med, What costs make up the second largest expense category, second only to staffing costs.
a. Fixed Costs
b. Variable Costs
c. Inventory
d. New Equipment

48
Q

c. Print your code or product lists and review/delete items
e. Reprint the list
a. Create a list of unconsolidated products
b. Count Inventory
d. Begin to enter / receive inventory

A

Below are the five steps to get your inventory under control. What order should they go?
a. Create a list of unconsolidated products
b. Count Inventory
c. Print your code or product lists and review / delete items
d. Begin to enter/receive inventory
e. Reprint the lists

49
Q

c. 1-4%

A

Any variance in inventory is an indication of a weakness or problem although a ____% variance on high turn items can be acceptable.
a. 1-2%
b. 2-4%
c. 1-4%
d. 3-6%

50
Q

Average Daily Use x Lead time = reorder point

A

What is the formula for calculating reorder point?

51
Q

Reorder Point

A

The number at which an inventory item can be reduced down to before it needs to be reordered.

52
Q

Reorder Quantity

A

This is the amount of product to order once the reorder point has been reached

53
Q

Average Daily Use x Turnover Goal (in days) = reorder quantity

A

What is the formula for calculating the reorder quantity of an inventory item?

54
Q

Zoning and Central Supply

A

What are two types of inventory organization techniques

55
Q

Selective Inventory Control

A

This is a Profit-based management system that prioritizes inventory based on value and importance

56
Q

a. 20%
according to Pareto’s 80/20 rule

A

the Selective Inventory Control theory suggests investing the most time in managing those products in the ___%
a. 20%
b. 50%
c. 70%
d. 80%

57
Q

Beginning of year inventory value + End of year inventory value divided by 2 = Avg Inv.
COGS for year / Avg Inv. = Inventory Turnover Ratio

A

What is the calculation for Inventory Turns?

58
Q

c. 40%

A

In vet med, a ___% mark-up on cost will likely result in break even for the practice once all costs of operations are considered
a. 20%
b. 33%
c. 40%
d. 55%

59
Q

Margin

A

This pricing strategy pre determines the amount of profit desired, and adds that to the acquisition cost. Can be a useful strategy where there are large differences in resulting price based on the size of the patient.

60
Q

Break Even Analysis

A

an analysis that is used to determine when your business will be able to cover all of its expenses and begin to make a profit

61
Q

Break Even Point

A

The amount of revenue that covers all fixed and variable costs without generating either profit or loss

62
Q

b. Break even analysis

A

The process used to determine how much money or service must be recovered or performed to cover the cost of purchasing equipment or adding a service to the practice.
a. Break even point
b. Break even analysis
c. Margin
d. Mark-up

63
Q

a. Break even Point

A

The point at which total revenues and total expenses are equal, where there is no net loss or gain on a piece of equipment or supply.
a. Break even point
b. Break even analysis
c. Margin
d. Mark-up

64
Q

Fixed Costs + Variable Costs + Profit = Break Even Sales Price Equation

A

What is the formula for calculating a Break Even Sales Price on a piece of equipment

65
Q

b. Prioritizing inventory time investment.
Since 20 % of our products bring in 80% of our produce revenue, we should concentrate the lion’s share of our efforts on that top 20%.

A

According to Practice Made Perfect; applying Pareto’s 80/20 rule to inventory helps in;
a. Making organizational decisions about inventory.
b. Prioritizing inventory time investment.
c. Creating a marketing strategy regarding inventory.
d. Making budget decisions regarding inventory.

66
Q

a. Monthly

A

Ideally, the top 20% of inventory items should be ordered;
a. Monthly
b. Weekly
c. When stock is down to 1-3 units.
d. When stock is no lower than 10 – 12 units.

67
Q

a. The Inventory Receiver
c. The Inventory Documenter and Tracker

A

To maintain tight internal controls the role of Inventory Purchaser should always be a separate individual from (multiple choice)
a. The Inventory Receiver
b. The Inventory Counter
c. The Inventory Documenter and Tracker
d. The Inventory Researcher

68
Q

all of the above

A

The Tax Act of 2003 provided what increased benefits to small business owners (Multiple Choice);
a. Significantly increased the amount of eligible property that can be written off in the first year.
b. Gave an additional deduction of 50% of the remaining balance of the equipment purchased that is above the $139,000.
c. The remainder of the purchases can also be depreciated on a straight line depreciation schedule.

69
Q

c. 1%

A

Practices should plan to reinvest around ___% of gross revenue for replacing or acquiring equipment annually.
a. 5%
b. 3%
c. 1%

70
Q

c. Yes, if it is in useable condition.

A

Is the digital radiography unit in your practice considered Capital Inventory?
a. If it is valued at $1,500 or higher.
b. If it is valued at $15,000 or higher.
c. Yes, if it is in useable condition.

71
Q

All of the Above

A

Which details below are considered a benefit of using logs in veterinary medicine? (Multiple Choice)
a. To comply with legal requirements such as controlled substances log.
b. Provide evidence in the event of a malpractice claim.
c. Convenient for quick data analysis and auditing.

72
Q

a. The AVMA Principles of Veterinary Medical Ethics.

A

The state Veterinary Practice Act defines minimum medical record documentation for each state. What other entity defines minimal requirements of veterinary medical records?
a. The AVMA Principles of Veterinary Medical Ethics.
b. Both the DEA and The AVMA Principles of Veterinary Medical Ethics
c. The AVMA Principles of Veterinary Medical Ethics and AAHA (American Animal Hospital Association)

73
Q

a. Problem Oriented Medical Record (POMR)

A

The most common medical record format is;
a. Problem Oriented Medical Record (POMR)
b. Source Oriented Medical Records (SOMR)

74
Q

True

A

True / False
Software and Hardware purchases will show greater return on investment than any other capital expense in veterinary medicine due to increased efficiency in every department.

75
Q

True

A

True / False
Hardware and software of both examples of Information Systems.

76
Q

c. ½ day

A

Ideally no less than _____ of on-site training should accompany any major software conversion.
a. 2 days
b. 1 day
c. ½ day

77
Q

b. Development.

A

Which of the four phases of Strategic Planning is focused on how the practice will get from point A (now) to point B (the future)?
a. Formulation.
b. Development.
c. Implementation.
d. Evaluation.

78
Q

b. Organizational Design.

A

Leadership Fatigue can be experienced by both owners and managers and usually results from a lack of communication, lack of delineation of job duties, and feeling that they are constantly haggling with the team to carry out policies and procedures. Which element of the strategic plan addresses this dynamic?
a. Organizational Development.
b. Organizational Design.
c. Organizational Learning.

79
Q

c. 12 – 36 months.

A

How long can it take to prepare a team member for a leadership position?
a. 6 – 12 months.
b. 12 – 24 months.
c. 12 – 36 months.
d. 24 – 36 months.

80
Q

b. Operating demands

A

Inventory Control is defined as the process whereby the need to maintain sufficient inventory to meet _________ is weighed against the monetary cost of carrying the inventory.
a. Inventory Turnover
b. Operating demands
c. Client demand
d. Supply and Demand

81
Q

b. 25-35%

A

Combined ordering and holding costs account for approximately what percent of total true cos
a. 15-25%
b. 25-35%
c. 30-40%

82
Q

all in order

A

The ABC Inventory Analysis contains multiple steps and can be somewhat complex – if you had to define the ABC Analysis in 5 steps, what would those steps be?
1. Create spreadsheet and calculate Annual Usage Volume.
2. Then calculate cumulative Annual Usage Volume.
3. Then calculate the Cumulative Percentage of Annual Usage Volume.
4. Then calculate the Annual Usage Distribution.
5. Group items into classes A, B, C.

83
Q

c. Average Inventory on Hand (AI)

A

The sum of the beginning inventory (BI) and the ending inventory (EI) divided by 2 is the calculation to determine what metric (BI + EI) / 2?
a. Min/max inventory reorder points
b. Monthly inventory to order
c. Average Inventory on Hand

84
Q

a. Higher

A

The _______the inventory turnover ratio, the tighter the inventory control.
a. Higher
b. Lower

85
Q

Economic Order Quantity (EOQ)

A

A mathematical formula, that recognizes three specific costs including unit cost, ordering cost, and holding cost, allows calculation of ideal inventory ordering

86
Q

Margin Pricing method

A

Regarding Mark-up and Margin pricing structures, which is a useful strategy to use where there are large differences in the end resulting price based on the size of the patient?

87
Q

Drugs used to treat chronic conditions

A

Which category of drugs is likely to have a higher mark-up; competitive drugs or drugs used to treat chronic conditions?

88
Q

False. Clients do not have a complete understanding or appreciation of the costs associated with dispensing medications.

A

True / False
Itemizing the various fees potentially associated with dispensing medication (labeling, dispensing, minimum, etc.) on the client invoice helps improve perceived value of the medication.

89
Q

10

A

Calculate the inventory variance using the following data;
Beginning quantity = 250
Amount ordered and received = 1000
Amount sold = 942
Physical count of quantity on hand = 298
Variance = ________________.

90
Q

Zoning and Central Supply

A

What are the two main inventory organizational techniques?

91
Q

Yep - all

A

What are the four steps to Inventory Budgeting?
1 – Project Revenue
2 – Project COG Expenses
3 – Project COG Subsection Expenses
4 – Share the Budget and Communicate Expectations.

92
Q

d. When ordering regularly used products
EOQ is a mathematical model that finds the optimum order quantity by determining the point at which inventory ordering and holding costs are minimized

A

In which situation would it be beneficial to apply the economic order quantity EOG formula?
a. When ordering new equipment
b. When ordering new products for the first time
c. When ordering manufacturer or seasonal specials
d. When ordering regularly used products

93
Q

All

A

Maximizing inventory turnover is a key strategy in creating an efficient and profitable inventory system. Name 4 ways to increase your inventory turnover
1. Product Consolidation
2. Order quantities that make sense
3. Measure and increase compliance
4. Doctor and staff product education

CVPM Practice Questions by SB (7 decks)

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