Certified Supply Chain Professional CSCP Practice CSCP Internal Operations and Inventory 1

Question 1

Which costing method assigns the most recent purchase costs to cost of goods sold, which can result in lower reported profits during periods of rising prices?

Accepted Answer

Last-In, First-Out (LIFO)

Answer

LIFO assigns the cost of the most recently purchased inventory to COGS first. During inflationary periods, this means higher COGS and lower taxable income, though it also results in a lower inventory valuation on the balance sheet.

Question 2

A manufacturer uses a fixed-order-quantity system. The reorder point is set at 150 units. What does this reorder point represent?

Accepted Answer

The on-hand inventory level at which a new order should be triggered

Answer

The reorder point (ROP) is the inventory level that triggers a new replenishment order. It is typically calculated as average demand during lead time plus safety stock, ensuring stock does not run out before the new order arrives.

Question 3

What is the primary distinction between push and pull production systems in internal operations?

Accepted Answer

Push systems produce based on forecasted demand; pull systems produce in response to actual customer demand

Answer

In a push system, production is driven by demand forecasts and scheduled in advance. In a pull system, production is triggered by actual downstream demand or consumption signals (such as kanbans), reducing overproduction and excess WIP.

Question 4

Which internal operations metric measures the percentage of time a machine or work center is available and producing compared to its total scheduled time?

Accepted Answer

Overall Equipment Effectiveness (OEE)

Answer

OEE combines availability, performance, and quality rates into a single metric that reflects how effectively manufacturing equipment is being used relative to its full potential during scheduled production time.

Question 5

In ABC inventory classification, which category typically represents the smallest percentage of SKUs but the largest percentage of annual inventory value?

Accepted Answer

A items

Answer

ABC analysis segments inventory by annual value. 'A' items generally represent roughly 10–20% of SKUs but account for approximately 70–80% of total annual inventory value, warranting the tightest controls and most frequent review.

Certified Supply Chain Professional CSCP Practice Practice Test

Certified Supply Chain Professional CSCP Practice Practice Test

Certified Supply Chain Professional CSCP Practice CSCP Internal Operations and Inventory 1