CDPP Inventory Management & Optimization

Question 1

What is safety stock and how is it calculated?

Accepted Answer

Extra inventory held to protect against uncertainty in demand and supply lead times

Answer

Stock that is stored in a secure vault

Answer

The minimum stock level required by safety regulations

Answer

Expired or damaged inventory that must be disposed of

Question 2

What is the Economic Order Quantity (EOQ) model?

Accepted Answer

A formula calculating the optimal order quantity that minimizes total holding and ordering costs

Answer

The maximum quantity allowed per government trade regulations

Answer

The quantity of goods that can fit in one shipping container

Answer

The minimum order amount required by suppliers

Question 3

What is ABC analysis in inventory management?

Accepted Answer

Classifying inventory into A (high value), B (medium value), and C (low value) categories for prioritized management

Answer

An alphabetical sorting system for warehouse locations

Answer

A method for grading product quality from A to C

Answer

A three-step inventory counting process

Question 4

What is the bullwhip effect in supply chain management?

Accepted Answer

The amplification of demand variability as you move upstream in the supply chain

Answer

A physical whip used in warehouse operations

Answer

The effect of wind on transportation vehicles

Answer

A stock market volatility pattern

Question 5

What is a service level in inventory planning?

Accepted Answer

The probability of not stocking out during a replenishment cycle, typically expressed as a percentage

Answer

The quality of customer service at retail locations

Answer

The number of service personnel per customer

Answer

A measurement of delivery speed to end consumers

Question 6

What is vendor-managed inventory (VMI)?

Accepted Answer

A practice where the supplier monitors and manages inventory levels at the customer's location

Answer

Inventory managed exclusively by vending machines

Answer

Inventory owned by the vendor but stored at a third party

Answer

A vendor evaluation scoring methodology