Inventory Control & Stock Replenishment Flashcards
7 cards from real CIM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Inventory Control & Stock Replenishment flashcards as text
A company has carrying costs of 25% of inventory value annually. If the average inventory value is $200,000, what is the annual carrying cost?
Answer: $50,000
Annual carrying cost = 25% × $200,000 = $50,000, covering storage, insurance, capital, and obsolescence costs.
Which replenishment signal is the foundation of a Kanban pull system?
Answer: A Kanban card or signal triggered by actual consumption
Kanban uses consumption-triggered signals (cards, bins, or electronic alerts) to authorize upstream replenishment only when material is actually used.
What distinguishes a 'push' replenishment system from a 'pull' replenishment system?
Answer: Push systems use forecasts to pre-position inventory; pull systems replenish based on actual demand
Push systems use demand forecasts to pre-build or pre-position inventory, while pull systems replenish only in response to actual consumption signals.
When a supplier offers a quantity discount, how does this affect the optimal order quantity compared to the standard EOQ?
Answer: The optimal order quantity may increase beyond EOQ if the discount saves more than the added holding costs
A quantity discount makes larger orders attractive if the purchase price savings outweigh the additional holding costs of carrying more inventory.
Which metric best measures how well a warehouse fulfills customer orders from available stock without backorders or substitutions?
Answer: Order fill rate
Order fill rate measures the percentage of customer orders fulfilled completely from stock on hand, directly reflecting inventory availability.
In material requirements planning (MRP), what is a 'time fence' used for?
Answer: To set a boundary within which production orders cannot be changed without formal approval
A time fence in MRP defines a planning horizon within which scheduled production or purchase orders are frozen to prevent disruptive last-minute changes.
Which situation would most likely trigger an emergency or expedited replenishment order?
Answer: A sudden demand spike depletes safety stock and threatens a stockout
Emergency replenishment is warranted when unexpected demand depletes safety stock, creating an imminent stockout risk that cannot wait for the normal order cycle.