CLP Inventory Control & Warehousing 3 — Questions and Answers
Question 1: In warehousing, what does 'cross-docking' primarily eliminate?
- The need for inbound receiving
- Storage time by transferring goods directly from inbound to outbound (Correct answer)
- Carrier selection decisions
- Customs documentation
Correct answer: Storage time by transferring goods directly from inbound to outbound
Cross-docking moves products directly from receiving docks to outbound trailers with little or no storage time.
Question 2: The economic order quantity (EOQ) model minimizes the total cost of:
- Transportation and customs duties
- Ordering and holding (carrying) costs (Correct answer)
- Labor and overhead expenses
- Damage and shrinkage costs
Correct answer: Ordering and holding (carrying) costs
EOQ balances ordering costs (fixed per order) against holding costs (proportional to inventory level) to find the optimal order size.
Question 3: A FIFO inventory rotation policy is most critical for which type of product?
- Steel structural components
- Perishable food items with expiration dates (Correct answer)
- Non-reactive industrial chemicals with indefinite shelf life
- Luxury consumer electronics
Correct answer: Perishable food items with expiration dates
FIFO ensures the oldest stock is used first, preventing expiration and spoilage of time-sensitive goods.
Question 4: Which document serves as the primary record of goods received into a warehouse from a supplier?
- Bill of lading
- Goods receipt note (GRN) (Correct answer)
- Purchase order
- Material safety data sheet
Correct answer: Goods receipt note (GRN)
A goods receipt note records details of items actually received, quantity, and condition, enabling three-way matching.
Question 5: What is 'shrinkage' in the context of inventory control?
- Planned reduction of SKU count
- Inventory loss due to theft, damage, administrative error, or spoilage (Correct answer)
- Reduction in order cycle time
- Compression of safety stock levels
Correct answer: Inventory loss due to theft, damage, administrative error, or spoilage
Shrinkage is the difference between recorded inventory and physical inventory, caused by theft, damage, or data errors.
Question 6: Which warehousing layout principle places fast-moving items closest to the shipping/receiving area?
- Random storage
- Dedicated storage by SKU number
- Velocity-based slotting (Correct answer)
- Chaotic storage
Correct answer: Velocity-based slotting
Velocity-based slotting positions high-velocity items near dock doors to minimize picker travel and speed order fulfillment.
Question 7: Cycle counting differs from an annual physical inventory primarily because cycle counting:
- Counts all inventory simultaneously at year-end
- Counts subsets of inventory on a rotating basis throughout the year (Correct answer)
- Is performed only by external auditors
- Requires a complete warehouse shutdown
Correct answer: Counts subsets of inventory on a rotating basis throughout the year
Cycle counting spreads counting activity across the year, counting specific locations or SKUs regularly without halting operations.
CLP Inventory Control & Warehousing 3
In warehousing, what does 'cross-docking' primarily eliminate?