Inventory Management Flashcards
6 cards from real CSCP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Inventory Management flashcards as text
What is 'days of supply' (DOS) as an inventory metric?
Answer: The number of days the current inventory will last at the current rate of consumption
Days of supply measures how long current inventory will satisfy demand, calculated as on-hand inventory divided by average daily usage.
The 'inventory turnover ratio' is calculated as:
Answer: Cost of goods sold divided by average inventory value
Inventory turnover measures how many times inventory is sold and replaced in a period; higher turns generally indicate better working capital efficiency.
Which type of inventory is held to buffer against uncertainty in the supply chain?
Answer: Safety stock
Safety stock is additional inventory held beyond cycle stock to protect against stockouts caused by demand variability or supply disruptions.
What is 'consignment inventory'?
Answer: Inventory owned by the supplier but held at the buyer's location, paid for only when consumed or sold
In consignment arrangements, the supplier retains ownership until the buyer uses or sells the goods, reducing the buyer's working capital requirements.
Excess and obsolete inventory is best managed through which approach?
Answer: Proactive monitoring of slow-moving items, root cause analysis, and liquidation or disposal programs
Effective E&O management identifies at-risk items early, investigates root causes, and implements structured disposition processes to recover value.
In a periodic review inventory system, orders are placed:
Answer: At fixed time intervals, with order quantity varying to bring inventory to a target level
Periodic review systems check inventory at set intervals and order variable quantities to restore a predetermined maximum inventory level.