Inventory Planning & Control Strategies 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 Planning & Control Strategies flashcards as text
A retailer experiences significantly higher demand in Q4 due to the holiday season. Which inventory strategy should be used to prepare?
Answer: Build anticipation inventory in advance of the demand peak
Anticipation inventory is built ahead of a predictable demand surge (seasonal or promotional) when current production or supply capacity cannot meet peak demand alone.
What is the 'bullwhip effect' in supply chain inventory management?
Answer: The amplification of demand variability as orders move upstream through the supply chain
The bullwhip effect describes how small fluctuations in end-customer demand are magnified into large swings in orders further up the supply chain, causing excess inventory and costs.
Which technique aggregates individual SKU forecasts into a product family or group forecast to improve overall planning accuracy?
Answer: Hierarchical forecasting
Hierarchical forecasting develops forecasts at multiple levels (family, subfamily, SKU), leveraging the greater statistical accuracy of aggregate forecasts before disaggregating to item level.
In an MRP system, what is 'gross requirements'?
Answer: The total demand for an item from all sources before considering available inventory
Gross requirements represent the total planned demand for a component from all parent items in the bill of materials, before netting against available inventory.
A company reduces its order quantity from 500 to 250 units. Assuming demand is constant, what happens to average cycle stock?
Answer: Average cycle stock is halved
Average cycle stock equals Q/2; halving the order quantity from 500 to 250 halves the average cycle stock from 250 to 125 units.
Which approach calculates a replenishment quantity by multiplying daily demand by a target number of days of supply?
Answer: Days-of-supply (DOS) method
The days-of-supply method determines order quantity as daily demand multiplied by the desired coverage period in days, providing a simple, intuitive replenishment rule.
What distinguishes a 'push' inventory replenishment system from a 'pull' system?
Answer: Push systems produce and ship based on forecasts; pull systems respond to actual consumption signals
In push systems, inventory is produced or ordered based on forecasts and pushed to the next stage; pull systems replenish only in response to actual demand consumption.