APP Inventory, Logistics & Supply Chain Management 3

Question 1

Which inventory valuation method results in the highest cost of goods sold during a period of rising prices?

Accepted Answer

LIFO (Last-In, First-Out)

Answer

Under LIFO, the most recently purchased (and therefore most expensive) items are sold first, producing the highest COGS when prices are rising.

Question 2

A purchasing manager wants to evaluate a 3PL provider. Which key performance indicator (KPI) measures the 3PL's ability to deliver complete, accurate, on-time orders without damage?

Accepted Answer

Perfect Order Rate

Answer

Perfect Order Rate measures the percentage of orders delivered complete, on time, undamaged, and with accurate documentation — the most comprehensive 3PL fulfillment KPI.

Question 3

What is the primary purpose of vendor-managed inventory (VMI)?

Accepted Answer

To allow the supplier to monitor stock levels and replenish inventory autonomously

Answer

In VMI, the supplier monitors the buyer's inventory data and takes responsibility for maintaining agreed stock levels, reducing the buyer's replenishment workload.

Question 4

Under Incoterms 2020, which term places maximum responsibility on the buyer?

Accepted Answer

EXW (Ex Works)

Answer

EXW places the least obligation on the seller — the buyer is responsible for all transportation, export clearance, insurance, and import duties from the seller's premises.

Question 5

A company uses a two-bin replenishment system. What triggers the reorder action?

Accepted Answer

The first bin is emptied, signaling use of the second (safety) bin

Answer

In a two-bin system, the second bin is a visual trigger — when the first bin empties and the second bin is opened, a replenishment order is placed.

(APP) Accredited Purchasing Practitioner Certification Practice Test

(APP) Accredited Purchasing Practitioner Certification Practice Test

APP Inventory, Logistics & Supply Chain Management 3