Practice Test Geeks(CPIM) Certified in Planning and Inventory Management Practice Test
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Inventory Management Flashcards

7 cards from real CPIM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Inventory Management flashcards as text

  1. Which inventory policy results in a variable order quantity placed at fixed time intervals?

    Answer: Fixed order period (FOP)

    A fixed order period system reviews inventory at set intervals and orders a variable quantity to bring inventory to a target level.

  2. What is 'vendor-managed inventory' (VMI)?

    Answer: A collaborative arrangement where the supplier manages stock levels at the customer's location

    In VMI, the supplier monitors inventory levels at the customer's site and takes responsibility for replenishment decisions.

  3. How does increasing the service level target affect safety stock?

    Answer: Safety stock increases, but at a diminishing marginal rate at high service levels

    Safety stock increases with higher service levels, but the relationship is non-linear — marginal increases in safety stock grow larger as service level approaches 100%.

  4. Which inventory metric measures the percentage of orders shipped complete and on time?

    Answer: Perfect order rate

    The perfect order rate measures the percentage of orders delivered complete, on time, undamaged, and with accurate documentation.

  5. In the context of CPIM, what does 'pipeline inventory' refer to?

    Answer: Inventory in transit between supply chain locations

    Pipeline inventory consists of items currently in transit — on trucks, ships, or between facilities — that have been shipped but not yet received.

  6. What is the impact of reducing lot sizes on work-in-process (WIP) inventory?

    Answer: WIP inventory decreases because items spend less time waiting in queue

    Smaller lot sizes reduce queue time between operations, decreasing average WIP inventory and lead times (per Little's Law).

  7. Which technique uses historical consumption data and exponential smoothing to forecast future demand for inventory planning?

    Answer: Exponential smoothing

    Exponential smoothing applies declining weights to historical data, with more recent periods receiving higher weight, making it efficient for inventory forecasting.