CPIM Inventory Management 2

Question 1

Which inventory cost is incurred regardless of whether items are ordered or held?

Accepted Answer

Fixed cost

Answer

Ordering cost

Answer

Holding cost

Answer

Stockout cost

Question 2

A company has average inventory of $500,000 and annual cost of goods sold of $3,000,000. What is the inventory turnover ratio?

Accepted Answer

6

Answer

3

Answer

4

Answer

5

Question 3

What is the primary purpose of a min-max inventory system?

Accepted Answer

To trigger replenishment when stock falls to the minimum level

Answer

To eliminate all safety stock

Answer

To maximize order quantities

Answer

To synchronize production with demand

Question 4

Which ABC classification category typically represents the largest number of SKUs but the lowest total value?

Accepted Answer

C items

Answer

A items

Answer

B items

Answer

D items

Question 5

What does 'days of supply' measure in inventory management?

Accepted Answer

How many days the current inventory will last at current demand rates

Answer

The time between placing and receiving an order

Answer

The number of days in the replenishment cycle

Answer

The average age of inventory on hand

Question 6

Which type of inventory is created due to the inability to produce all items simultaneously?

Accepted Answer

Cycle stock

Answer

Safety stock

Answer

Anticipation inventory

Answer

Pipeline inventory

Question 7

A perpetual inventory system differs from a periodic system in that it:

Accepted Answer

Updates inventory records continuously with every transaction

Answer

Counts inventory only at month-end

Answer

Requires manual counting more frequently

Answer

Uses estimated values between physical counts