CLA - Certified Logistics Associate Inventory Control Questions and Answers 1 — Questions and Answers
Question 1: What is the primary purpose of cycle counting in an inventory control system?
- To calculate the total value of all inventory for annual financial reports.
- To identify the fastest-moving products for re-slotting.
- To regularly verify and maintain high levels of inventory record accuracy without stopping operations. (Correct answer)
- To replace the need for a warehouse management system (WMS).
Correct answer: To regularly verify and maintain high levels of inventory record accuracy without stopping operations.
Cycle counting is an inventory auditing method where a small subset of inventory is counted on a specified day or schedule. This ongoing process allows a business to find and correct discrepancies as they occur and maintain high inventory accuracy without the major disruption of a full, wall-to-wall physical inventory count.
Question 2: A warehouse manager wants to apply different levels of control to various products. They decide to focus the most effort on the 20% of items that constitute 80% of the inventory value. Which inventory control method should they use?
- First-In, First-Out (FIFO)
- ABC Analysis (Correct answer)
- Just-In-Time (JIT)
- Economic Order Quantity (EOQ)
Correct answer: ABC Analysis
ABC analysis is an inventory categorization technique based on the Pareto Principle (80/20 rule). It divides inventory into three categories: 'A' for very high-value items, 'B' for medium-value items, and 'C' for low-value items. This allows for applying the tightest controls and most frequent monitoring to the high-value 'A' items.
Question 3: Which of the following best describes the role of 'safety stock' in an inventory management strategy?
- It is inventory that has been set aside due to damage or quality control failure.
- It is extra inventory held to mitigate the risk of stockouts caused by uncertainties in supply and demand. (Correct answer)
- It refers to the oldest stock that must be sold first to prevent expiration.
- It is the minimum amount of stock required to trigger a new purchase order.
Correct answer: It is extra inventory held to mitigate the risk of stockouts caused by uncertainties in supply and demand.
Safety stock, also known as buffer stock, is a reserve of inventory held to protect against variabilities in demand and lead time. It ensures that a company can continue to fulfill orders even if there's an unexpected surge in sales or a delay in a supplier shipment, thus preventing stockouts.
Question 4: A warehouse stores perishable goods, such as food products. Which inventory valuation and rotation method is most critical to implement to minimize spoilage and waste?
- Last-In, First-Out (LIFO)
- Just-In-Time (JIT)
- ABC Analysis
- First-In, First-Out (FIFO) (Correct answer)
Correct answer: First-In, First-Out (FIFO)
FIFO (First-In, First-Out) is a method where the first units of stock to arrive are the first ones to be sold or used. This is essential for perishable goods or products with expiration dates to ensure that older stock is used before it spoils or becomes obsolete, thereby minimizing waste.
Question 5: A logistics associate is receiving a shipment and finds that the quantity of items is less than the quantity listed on the packing slip. What is the immediate and most appropriate inventory control action?
- Document the discrepancy on the receiving paperwork and notify a supervisor. (Correct answer)
- Enter the packing slip quantity into the WMS to save time and adjust it later.
- Add the received quantity to the shelf and assume the missing items will arrive later.
- Refuse the entire shipment and instruct the driver to return it to the sender.
Correct answer: Document the discrepancy on the receiving paperwork and notify a supervisor.
The most critical first step in maintaining inventory accuracy is to ensure records are correct at the point of receiving. Any discrepancy between the physical count and the shipping documents must be formally noted on the paperwork (e.g., Bill of Lading) and reported to a supervisor. This action creates an official record and allows the company to address the shortage with the vendor or carrier before the incorrect quantity enters the inventory system.
Question 6: In inventory control, the metric that compares the quantity of an item recorded in the warehouse management system (WMS) to the actual, physical quantity on the shelf is known as:
- Inventory Turnover
- Order Fill Rate
- Inventory Record Accuracy (Correct answer)
- Dock-to-Stock Time
Correct answer: Inventory Record Accuracy
Inventory Record Accuracy is a key performance indicator (KPI) that measures the percentage of agreement between inventory records in the system and the physical count of items in the warehouse. High accuracy is crucial for preventing stockouts, reducing carrying costs, and ensuring efficient operations.
CLA - Certified Logistics Associate Inventory Control Questions and Answers 1
What is the primary purpose of cycle counting in an inventory control system?