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Inventory Performance Metrics & KPIs 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.

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  1. What does the inventory turnover ratio measure?

    Answer: The number of times inventory is sold and replaced over a period

    Inventory turnover ratio measures how many times inventory is sold and replenished during a specific period, typically calculated as COGS divided by average inventory.

  2. Which formula correctly calculates Days Inventory Outstanding (DIO)?

    Answer: (Average Inventory / COGS) × 365

    DIO = (Average Inventory ÷ COGS) × 365, which represents the average number of days a company holds inventory before selling it.

  3. 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.

  4. A company's fill rate is 92%. What does this indicate?

    Answer: 92% of customer orders were fulfilled completely from available stock

    Fill rate measures the percentage of customer demand satisfied immediately from on-hand inventory without backorders or lost sales.

  5. Which KPI best measures the financial cost of holding inventory relative to its value?

    Answer: Carrying cost as a percentage of inventory value

    Carrying cost as a percentage of inventory value (typically 20–30%) captures storage, insurance, obsolescence, and capital costs relative to total inventory investment.

  6. What is the stockout rate KPI used to measure?

    Answer: The frequency or percentage of time a SKU is unavailable when demanded

    Stockout rate tracks how often inventory is depleted and unavailable to fulfill demand, directly impacting customer service levels and lost sales.

  7. Order cycle time as an inventory KPI measures which of the following?

    Answer: The total time from purchase order placement to inventory receipt

    Order cycle time (also called lead time) measures the elapsed time from when a purchase order is placed to when the inventory is received, affecting reorder planning.