Practice Test GeeksCPIM - Certified in Production and Inventory Management Practice Test
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Inventory Management and Control Flashcards

7 cards from real CPIM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. What does EOQ stand for in inventory management?

    Answer: Economic Order Quantity

    EOQ (Economic Order Quantity) is the order quantity that minimizes the combined total of ordering and carrying costs.

  2. The EOQ formula minimizes the total of which two types of costs?

    Answer: Ordering costs and carrying costs

    EOQ balances ordering costs (which decrease per unit as order size grows) against carrying costs (which increase as more inventory is held), finding the quantity where their total is minimized.

  3. In a fixed-order-quantity (Q) system, what triggers a replenishment order?

    Answer: Inventory falling to a predetermined reorder point

    In a fixed-order-quantity system, a standard order for the same quantity is placed whenever the inventory level drops to the reorder point (ROP).

  4. What is the basic formula for the reorder point (ROP) when demand and lead time are known?

    Answer: ROP = Average daily demand × Lead time + Safety stock

    The reorder point equals average daily demand multiplied by lead time in days, plus safety stock to protect against variability during the replenishment period.

  5. Which lot sizing technique orders exactly the quantity needed to satisfy net requirements for each period?

    Answer: Lot-for-Lot (L4L)

    Lot-for-Lot (L4L) generates orders that exactly match net requirements period by period, producing no excess inventory and minimizing carrying costs.

  6. In a periodic review (P) inventory system, what element varies each review cycle?

    Answer: The order quantity

    In a periodic review system, orders are placed at fixed intervals but the quantity ordered varies each cycle to bring inventory up to a predetermined target level.

  7. Which inventory valuation method assumes the most recently purchased items are consumed first?

    Answer: LIFO (Last In, First Out)

    LIFO (Last In, First Out) assumes the newest inventory items are used or sold first, which can affect reported cost of goods sold and inventory valuation.