CFA Inventory & Resource Management 1 — Questions and Answers
Question 1: What is the primary purpose of conducting a physical inventory count in field operations?
- To verify that recorded stock levels match actual on-hand quantities (Correct answer)
- To determine the market value of all assets
- To identify employees who are misusing resources
- To calculate the depreciation of field equipment
Correct answer: To verify that recorded stock levels match actual on-hand quantities
Physical inventory counts verify that recorded stock levels accurately reflect actual quantities on hand, helping identify and resolve discrepancies.
Question 2: When a field associate notices that supply levels have dropped below the reorder point, what should be the immediate next step?
- Wait until the end of the month to order all supplies at once
- Initiate a replenishment order according to established procurement procedures (Correct answer)
- Borrow supplies from a neighboring territory
- Continue operations and note the shortage in the final report
Correct answer: Initiate a replenishment order according to established procurement procedures
When supplies drop below the reorder point, the associate should immediately initiate a replenishment order per established procedures to prevent stockouts.
Question 3: Which inventory management technique categorizes items by their annual consumption value to prioritize management efforts?
- FIFO (First-In, First-Out)
- ABC Analysis (Correct answer)
- Just-In-Time (JIT)
- Economic Order Quantity (EOQ)
Correct answer: ABC Analysis
ABC Analysis categorizes inventory into A (high value), B (medium value), and C (low value) groups based on annual consumption value to focus management attention appropriately.
Question 4: What does FIFO stand for, and how does it apply to managing perishable field supplies?
- First-In, First-Out — oldest stock is used or distributed before newer stock (Correct answer)
- First-In, First-Out — newest stock is always used first to maintain freshness
- Fixed Inventory, Fixed Output — stock levels remain constant
- Field Inventory, Field Operations — all field assets are tracked together
Correct answer: First-In, First-Out — oldest stock is used or distributed before newer stock
FIFO (First-In, First-Out) ensures the oldest inventory is consumed first, which is critical for perishable items to minimize waste and expiration losses.
Question 5: A field associate discovers a discrepancy between the inventory log and actual stock. What is the BEST first action?
- Adjust the log to match actual stock without documentation
- Conduct a recount to confirm the discrepancy, then document and report it (Correct answer)
- Ignore the discrepancy if it is less than 5% variance
- Immediately suspend all operations until the issue is resolved
Correct answer: Conduct a recount to confirm the discrepancy, then document and report it
The correct procedure is to recount to confirm the discrepancy, then document findings and report through proper channels to maintain accountability.
Question 6: What is the purpose of an asset tag on field equipment?
- To indicate the replacement cost of the equipment
- To uniquely identify and track each piece of equipment in the organization's asset register (Correct answer)
- To show which employee is personally liable for the equipment
- To indicate the date when the equipment must be retired
Correct answer: To uniquely identify and track each piece of equipment in the organization's asset register
Asset tags provide a unique identifier that links physical equipment to its record in the asset register, enabling accurate tracking and lifecycle management.
Question 7: Which of the following best describes a 'stockout' in the context of field resource management?
- Excess inventory that exceeds storage capacity
- A situation where required supplies or materials are unavailable when needed (Correct answer)
- The process of removing outdated stock from inventory
- A scheduled reduction in inventory levels for audit purposes
Correct answer: A situation where required supplies or materials are unavailable when needed
A stockout occurs when required supplies or materials are unavailable when needed, which can disrupt field operations and service delivery.
CFA Inventory & Resource Management 1
What is the primary purpose of conducting a physical inventory count in field operations?