CLT Inventory Management & Control 2 — Questions and Answers
Question 1: A cycle count shows 47 units in a bin, but the WMS shows 50. What should the technician do first?
- Adjust the system to 47 immediately
- Recount the location to verify the discrepancy (Correct answer)
- Move the 47 units to a new bin
- Report the 3 units as stolen
Correct answer: Recount the location to verify the discrepancy
Standard practice is to recount and verify before making any inventory adjustment.
Question 2: Under ABC analysis, which items are usually counted most often?
- C items, because there are so many of them
- B items, because they are mid-value
- A items, because they make up most of the annual dollar value (Correct answer)
- All items are counted the same number of times
Correct answer: A items, because they make up most of the annual dollar value
A items make up a small share of SKUs but most of the dollar value, so they get counted most often.
Question 3: A pharmacy distributor ships the units with the earliest expiration date first, no matter when they arrived. Which method is this?
- FIFO
- LIFO
- FEFO (Correct answer)
- HIFO
Correct answer: FEFO
FEFO (First Expired, First Out) ranks stock by expiration date, not by when it was received.
Question 4: Daily demand is 20 units, lead time is 5 days, and safety stock is 30 units. What is the reorder point?
- 100 units
- 130 units (Correct answer)
- 150 units
- 70 units
Correct answer: 130 units
Reorder point = (20 x 5) + 30 = 130 units.
Question 5: Which inventory system updates on-hand balances in real time after every receipt and shipment?
- Periodic inventory system
- Perpetual inventory system (Correct answer)
- Two-bin system
- Visual review system
Correct answer: Perpetual inventory system
A perpetual system updates records with every transaction, so balances are always current.
Question 6: Inventory shrinkage is best described as:
- Stock lost to theft, damage, or recording errors (Correct answer)
- Planned reduction of safety stock
- Lower demand during the off-season
- Stock moved to a different warehouse
Correct answer: Stock lost to theft, damage, or recording errors
Shrinkage is the gap between recorded and actual inventory caused by theft, damage, or errors.
Question 7: Annual cost of goods sold is $600,000 and average inventory is $150,000. What is the inventory turnover ratio?
Correct answer: 4
Turnover = COGS / average inventory = 600,000 / 150,000 = 4.
