Mixed Deck — All CIM Topics Flashcards

What is the primary compliance risk of maintaining inaccurate inventory records for goods subject to FDA oversight?

Answer: Inability to conduct mandatory recalls and potential criminal liability for introducing misbranded goods into commerce

FDA-regulated companies must maintain accurate records to support product traceability and recalls; inaccurate records can result in criminal charges for violations of the Federal Food, Drug, and Cosmetic Act.

Vendor-Managed Inventory (VMI) shifts responsibility for replenishment decisions to whom?

Answer: The supplier or vendor

In VMI, the supplier monitors the buyer's inventory levels and takes responsibility for making replenishment decisions.

When evaluating inventory software vendors, which metric best measures how well the system handles increasing transaction volumes over time?

Answer: Scalability

Scalability measures a system's ability to maintain performance as transaction volume, user count, and data size grow.

Which replenishment method uses a min-max system where an order is triggered when stock falls below the minimum level?

Answer: Min-max (s, S) system

The min-max or (s, S) system places an order up to the maximum level whenever stock falls to or below the minimum (reorder) level.

Which of the following is a key prerequisite for successfully implementing JIT inventory?

Answer: Reliable, high-quality suppliers capable of frequent small deliveries

JIT depends entirely on suppliers delivering defect-free materials on time in small quantities, making supplier reliability non-negotiable.

Which technique uses historical data to estimate future demand?

Answer: Time series analysis

Time series analysis is a quantitative forecasting technique that uses historical data points, collected over time, to identify patterns, trends, and seasonal variations. By analyzing these past patterns, it estimates future demand for products. This method is effective for stable products with consistent sales histories.

Which document does a supplier send to confirm acceptance of a buyer's purchase order?

Answer: Order acknowledgment

An order acknowledgment is the supplier's formal response confirming they have received, reviewed, and accepted the terms of the buyer's purchase order.

Which of the following best describes 'transshipment fraud' in international trade?

Answer: Routing goods through a third country to falsely claim origin and avoid duties or sanctions

Transshipment fraud involves routing goods through an intermediate country to disguise their true origin and evade applicable tariffs, quotas, or trade restrictions.

What is the significance of a 'reasonable care' standard in U.S. customs compliance?

Answer: Importers are legally required to exercise due diligence to ensure the accuracy of their customs declarations

The Customs Modernization Act established that importers bear the legal responsibility to exercise reasonable care in all customs filings and transactions.

A company uses a continuous review system. When the inventory level drops to the reorder point, which action is triggered?

Answer: A fixed-quantity order is placed

In a continuous review (Q) system, a fixed order quantity is placed whenever inventory drops to the reorder point.

What is the key difference between a 'recount' and a 'recheck' in cycle counting procedures?

Answer: A recount uses different counters; a recheck uses the same counters

A recount uses a different, independent team to re-count the same location, while a recheck has the original counters verify their own work.

Which metric is primarily used to rank SKUs when performing a traditional ABC analysis?

Answer: Annual dollar usage (price × annual demand)

Annual dollar usage — calculated as unit cost multiplied by annual demand — is the standard ranking metric in ABC analysis.

Which warehouse picking method has one picker complete all lines of a single order before moving to the next order?

Answer: Discrete (single-order) picking

Discrete picking assigns one picker to fulfill all items of one order at a time, which is simple but can result in high travel distances.

What is a 'return merchandise authorization' (RMA) system primarily designed to do?

Answer: Control and track the return process from initiation to disposition

An RMA system controls and tracks each return from authorization through receipt and final disposition, ensuring process compliance and data capture.

In healthcare supply chains, VMI is often used in hospital stockrooms primarily to:

Answer: Reduce nurse time spent on supply requisitioning and ordering

VMI in hospitals shifts supply management to the vendor so clinical staff can focus on patient care rather than inventory tasks.

What does GMROI stand for and what does it measure?

Answer: Gross Margin Return on Investment; profitability of inventory investment

GMROI (Gross Margin Return on Investment) measures how much gross margin is earned for every dollar invested in inventory, calculated as Gross Margin divided by Average Inventory Cost.

An inventory manager notices that a supplier is listing undervalued prices on commercial invoices to reduce duty payments. This practice is called:

Answer: Customs fraud / undervaluation

Customs undervaluation is the fraudulent practice of declaring a lower transaction value than actually paid to reduce duty payments, which violates customs law.

What does FIFO stand for in warehouse inventory management?

Answer: First In, First Out

FIFO stands for First In, First Out, an inventory valuation and management method where the first goods purchased or produced are the first ones sold, used, or removed from inventory. This method is crucial for managing perishable goods or items with limited shelf lives, ensuring older stock is moved before it expires or becomes obsolete. It helps minimize waste and maintain product freshness.

What is the primary purpose of a 'returns authorization matrix' in inventory management?

Answer: To define which products can be returned, by whom, and under what conditions

A returns authorization matrix pre-defines eligibility rules (product type, age, condition, customer tier) to ensure consistent and policy-compliant return decisions.

A distributor using VMI for a hospital client sets a reorder point of 500 units and a target level of 1,200 units. Current stock is 480 units. What should the distributor do?

Answer: Replenish 720 units to restore the target level

When stock falls below the reorder point, the vendor replenishes up to the target level: 1,200 − 480 = 720 units.