CIM Inventory Control & Stock Replenishment 5

Question 1

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?

Accepted Answer

$50,000

Answer

Annual carrying cost = 25% × $200,000 = $50,000, covering storage, insurance, capital, and obsolescence costs.

Question 2

Which replenishment signal is the foundation of a Kanban pull system?

Accepted Answer

A Kanban card or signal triggered by actual consumption

Answer

Kanban uses consumption-triggered signals (cards, bins, or electronic alerts) to authorize upstream replenishment only when material is actually used.

Question 3

What distinguishes a 'push' replenishment system from a 'pull' replenishment system?

Accepted Answer

Push systems use forecasts to pre-position inventory; pull systems replenish based on actual demand

Answer

Push systems use demand forecasts to pre-build or pre-position inventory, while pull systems replenish only in response to actual consumption signals.

Question 4

When a supplier offers a quantity discount, how does this affect the optimal order quantity compared to the standard EOQ?

Accepted Answer

The optimal order quantity may increase beyond EOQ if the discount saves more than the added holding costs

Answer

A quantity discount makes larger orders attractive if the purchase price savings outweigh the additional holding costs of carrying more inventory.

Question 5

Which metric best measures how well a warehouse fulfills customer orders from available stock without backorders or substitutions?

Accepted Answer

Order fill rate

Answer

Order fill rate measures the percentage of customer orders fulfilled completely from stock on hand, directly reflecting inventory availability.

(CIM) Certified Inventory Manager Practice Test

(CIM) Certified Inventory Manager Practice Test

CIM Inventory Control & Stock Replenishment 5