CIM Inventory Performance Metrics & KPIs

Question 1

What does the inventory turnover ratio measure?

Accepted Answer

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

Answer

The ratio of on-hand stock to total warehouse capacity

Answer

The percentage of orders fulfilled on the first shipment attempt

Answer

The average number of days it takes to receive a supplier order

Question 2

Which formula correctly calculates Days Inventory Outstanding (DIO)?

Accepted Answer

(Average Inventory / COGS) × 365

Answer

(COGS / Average Inventory) × 365

Answer

(Net Sales / Average Inventory) × 30

Answer

(Average Inventory / Net Sales) × 30

Question 3

What does GMROI stand for and what does it measure?

Accepted Answer

Gross Margin Return on Investment; profitability of inventory investment

Answer

General Market Return on Inventory; inventory's market value change

Answer

Gross Merchandise Revenue on Items; total revenue per SKU

Answer

General Margin Rate of Inventory; carrying cost as a margin percentage

Question 4

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

Accepted Answer

92% of customer orders were fulfilled completely from available stock

Answer

92% of warehouse storage space is currently being utilized

Answer

92% of purchase orders were received on time from suppliers

Answer

92% of inventory items have been counted and verified this period

Question 5

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

Accepted Answer

Carrying cost as a percentage of inventory value

Answer

Inventory turnover ratio

Answer

Days Sales of Inventory

Answer

Order fill rate

Question 6

What is the stockout rate KPI used to measure?

Accepted Answer

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

Answer

The rate at which obsolete inventory is written off

Answer

The percentage of orders shipped from a secondary warehouse location

Answer

The number of purchase orders placed per month to replenish stock

Question 7

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

Accepted Answer

The total time from purchase order placement to inventory receipt

Answer

The average time between customer orders for a specific SKU

Answer

The number of inventory replenishment cycles completed per year

Answer

The time required to count and reconcile physical inventory