CIM ABC Analysis & Classification 3

Question 1

When applying ABC analysis to spare parts inventory, which additional factor beyond dollar usage is most critical?

Accepted Answer

Equipment downtime risk if the part is unavailable

Answer

For spare parts, equipment downtime risk (criticality) must supplement dollar usage to ensure operationally vital parts receive adequate stock coverage.

Question 2

A buyer manages 1,000 SKUs. After ABC analysis, she dedicates 80% of her purchasing time to Class A items. This approach is best described as:

Accepted Answer

Selective inventory control

Answer

ABC analysis enables selective inventory control by directing disproportionate management effort toward the highest-value items.

Question 3

How often should ABC classifications typically be reviewed and updated?

Accepted Answer

Periodically (e.g., annually or when demand patterns change significantly)

Answer

ABC classifications should be reviewed periodically — commonly annually — or whenever significant changes in demand, price, or product mix occur.

Question 4

A firm uses multi-criteria ABC analysis combining annual value and lead time. An item with low annual value but a 16-week lead time would likely be reclassified from C to:

Accepted Answer

Class A

Answer

Long lead times increase supply risk significantly, and multi-criteria analysis can elevate such items to Class A for tighter management.

Question 5

In ABC analysis, which class typically has the highest reorder point (ROP) relative to its consumption rate?

Accepted Answer

Class A

Answer

Class A items, due to their high value and tight control requirements, are often managed with higher reorder points to minimize stockout risk.

(CIM) Certified Inventory Manager Practice Test

(CIM) Certified Inventory Manager Practice Test

CIM ABC Analysis & Classification 3