CIM Inventory Control & Stock Replenishment 2

Question 1

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

Accepted Answer

A fixed-quantity order is placed

Answer

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

Question 2

What does the term 'cycle stock' refer to in inventory management?

Accepted Answer

The portion of inventory that depletes and is replenished through regular ordering

Answer

Cycle stock is the working inventory that is regularly consumed and replenished as part of normal ordering cycles.

Question 3

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

Accepted Answer

Min-max (s, S) system

Answer

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.

Question 4

A retailer has average daily sales of 50 units, a lead time of 6 days, and safety stock of 80 units. What is the reorder point?

Accepted Answer

380 units

Answer

Reorder point = (average daily demand × lead time) + safety stock = (50 × 6) + 80 = 380 units.

Question 5

In ABC analysis, which category typically represents the smallest percentage of items but the highest percentage of total inventory value?

Accepted Answer

A items

Answer

A items (roughly 10-20% of SKUs) typically account for 70-80% of total inventory value and receive the most control.

(CIM) Certified Inventory Manager Practice Test