CPIM - Certified in Planning and Inventory Management Inventory Management Questions and Answers

Question 1

A warehouse manager is implementing an inventory control program.
An analysis reveals that 15% of SKUs account for 80% of the annual dollar value, 35% of SKUs account for 15%, and the remaining 50% of SKUs account for only 5%.
Based on this distribution, which inventory management technique is MOST appropriate?

Accepted Answer

ABC classification

Answer

Economic Order Quantity (EOQ) modeling

Answer

Just-in-Time (JIT) system

Answer

A periodic review system for all items

Question 2

A manufacturing company holds extra components just before a machine's scheduled annual maintenance, during which the machine will be shut down and unable to produce. This type of inventory is BEST classified as:

Accepted Answer

Anticipation inventory

Answer

Decoupling inventory

Answer

Pipeline inventory

Answer

Safety stock

Question 3

A distribution center needs to determine the reorder point (ROP) for a product. The average daily demand is 60 units, the lead time from the supplier is 8 days, and management has set the required safety stock at 120 units. At what inventory level should a new order be placed?

Accepted Answer

600 units

Answer

180 units

Answer

480 units

Answer

120 units

Question 4

The basic Economic Order Quantity (EOQ) model is a foundational concept for determining the optimal order size. Which of the following is a key assumption of this model?

Accepted Answer

Demand is constant and known.

Answer

Lead time from the supplier is variable.

Answer

Quantity discounts on purchases are considered.

Answer

Stockouts are permitted and planned for.

Question 5

A company is experiencing frequent discrepancies between its inventory records and physical stock counts, leading to stockouts and production delays. To improve inventory record accuracy on a continual basis, which of the following is the MOST appropriate and sustainable practice to implement?

Accepted Answer

Implement a robust cycle counting program.

Answer

Increase safety stock levels for all items.

Answer

Perform a complete wall-to-wall physical inventory count once a year.

Answer

Switch to a Just-in-Time (JIT) system immediately.

Question 6

In the context of total inventory costs, which of the following would be considered an ordering cost?

Accepted Answer

Clerical costs for preparing a purchase order.

Answer

Insurance and taxes on inventory.

Answer

Cost of capital tied up in stock.

Answer

Spoilage of perishable goods.