CPIM Inventory Management and Control

Question 1

What does ABC analysis classify inventory items based on?

Accepted Answer

Annual usage value

Answer

Physical size of items

Answer

Lead time from suppliers

Answer

Number of suppliers

Question 2

In ABC analysis, which category typically represents approximately 20% of SKUs but 80% of total inventory value?

Accepted Answer

A items

Answer

C items

Answer

B items

Answer

D items

Question 3

What is cycle counting in inventory management?

Accepted Answer

A continuous audit where a subset of inventory is counted on a rotating schedule

Answer

Counting all inventory at one time annually

Answer

Counting items based on the production cycle time

Answer

Counting items in a circular warehouse layout

Question 4

Which inventory cost is incurred when a company cannot fulfill a customer order due to insufficient stock?

Accepted Answer

Stockout cost

Answer

Carrying cost

Answer

Ordering cost

Answer

Setup cost

Question 5

What is the primary purpose of safety stock in an inventory system?

Accepted Answer

To buffer against demand and supply variability

Answer

To reduce ordering costs

Answer

To maximize inventory turnover

Answer

To reduce storage space requirements

Question 6

Which of the following is an example of an inventory carrying cost?

Accepted Answer

Warehouse storage and insurance costs

Answer

Purchase order processing fees

Answer

Emergency expediting shipment fees

Answer

Production run setup costs

Question 7

What does the inventory turnover ratio measure?

Accepted Answer

How many times inventory is sold and replaced over a period

Answer

How quickly a company pays its suppliers

Answer

The ratio of finished goods to raw materials

Answer

How often physical cycle counts are performed