PART 1: VOCABULARY

1. Risk premium A. the strategy of setting a low price to try to sell a large volume and increase
market share
2. Capacity B. dividing a market into distinct groups of buyers who have different
requirements or buying habits
3. Replenish C. setting a high price for a new product, to make maximum revenue before
competing products appear on the market
4. Market segmentation D. the value of a business activity
5. Kanban E. is a company’s reserves of raw materials, parts, work in process and finished
products
6. Market share F. the potential cost of taking a chance
7. A supply chain G. the sales of a company expressed as a percentage of total sales in a given
market
8. Market penetration H. businesses that sell goods or merchandise to individual consumers
9. Founder I. designing and managing the flow of goods, information and other resources
10. Retailers J. written promises to repair or replace products that develop a fault
11. Service K. to examine a machine and repair any faulty parts
12. Market skimming L. system signal that items need to be replaced
13. Outsourcing M. is the maximum rate of output that can be achieved from a production process
14. Lean N. means buying products or processed materials from other companies rather than
manufacturing them
15. Equity O. to fill something up again
16. Warranties P. someone who contacts existing and potential customers, and try to persuade
them to buy goods or services
17. Product mix Q. is a network organization involved in producing and delivering goods or service
18. Inventory R. using small quantities and avoiding any waste
19. Sales representative S. all the different products, brands and items that a company sells
20. Logistics T. someone who establishes a company

PART 2: READING

A. stock available for B. to price your C. raw materials D. duration E. economies of scale
sale products competitively
and maximize profits
F. work-in-process G. possibilities of H. past experiences or I. overall J. to access trade
stocks going obsolete mathematical models manufacturing discounts
inventory

Ideas for Reducing Manufacturing Inventory

Manufacturing inventory is a detailed summary of the costs of material inputs and product outputs attributable to production
processes. (1) …………………. are the parts you purchase to process or assemble into finished products. (2)
……………………… is the category of incomplete products and the accompanying raw materials, labor and manufacturing
overhead costs. Finished goods inventory includes the materials, labor, and overhead costs of the complete products. Reduced
manufacturing inventory enables you (3)…………………………… .
Ordering
Minimizing purchasing costs significantly reduces the (4)………………………. . Try automating the ordering process, perhaps
by employing electronic channels such as the electronic data interchange, to eliminate the labor costs required to process
paperwork for purchase orders. EDI is particularly effective in signaling diminishing stocks and transmitting purchase orders to
suppliers within the shortest time possible with minimal efforts.

Cycle Time
Cycle time is the (5) ……………………….. you require to complete different phases of manufacturing products. The faster the
manufacturing processes, the shorter the cycle time. Hastened flow of production enables you to maintain low inventory levels
by reducing the stock of raw materials, work-in-process and finished goods time. Reducing the cycle time reduces the (6)
……………………. because you will not keep raw materials and finished goods for long.
Cycle Stock
Cycle stock inventory is the (7)……………………. . In a manufacturing setup, these are the finished goods. Use work schedules
to minimize the labor and storage costs of handling cycle stock. You can reduce cycle stock inventory in a manufacturing setup
by preparing prior plans, undertaking advance staging of requisite materials or parts and initiating changeover prior to
completing the previous runs.
Bulk Purchase
Purchase raw materials in bulk (8)………………….. . Trade discounts have significant impact on the overall inventory costs
when huge sums of money are involved. Bulk purchases also enable you to optimize your company’s (9) ……………………. in
production processes. However, avoid making bulk purchases without taking into account the existing production needs or you
risk overstocking.
Forecasting
Conduct regular forecasts of the market demand for your products to avoid arbitrary purchase of raw materials and excessive
stocking of finished products as well. Use (10) …………………. to make these forecasts. This enables you to match production
to the prevailing levels of market demand and to stock only the necessary raw materials.

PART 3: BUSINESS UNDERSTANDING – SHORT ANSWERS

1. What is the basic difference between pull strategy and push strategy?
2. What is the difference between corporate branding and individual branding?
3. How many stages in the product life cycle? What are they?
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ANSWERS
PART 1: (40m)

1. F 2. M 3. O 4. B 5. L 6. G 7. Q 8. A 9. T 10. H
11. K 12. C 13. N 14. R 15. D 16. J 17. S 18. E 19. P 20. I

PART 2: (30m)

1. C 2. F 3. B 4. I 5. D 6. G 7. A 8. J 9. E 10. H

PART 3: (30m)
1. With a pull strategy, a company manufactures according to current demand. However, with a push strategy, a company
manufactures bases on estimates of future demand.
2. Corporate branding means including the company’s name in all its products, while individual branding means giving each
product its own brand name.
3. There are 4 stages in the product life cycle. Including:
a. Introduction stage c. Maturing stage
b. Growth stage d. Decline stage
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