CPIM Inventory Management 4

Question 1

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

Accepted Answer

Fixed order period (FOP)

Answer

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

Question 2

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

Accepted Answer

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

Answer

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

Question 3

How does increasing the service level target affect safety stock?

Accepted Answer

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

Answer

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%.

Question 4

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

Accepted Answer

Perfect order rate

Answer

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

Question 5

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

Accepted Answer

Inventory in transit between supply chain locations

Answer

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

(CPIM) Certified in Planning and Inventory Management Practice Test

(CPIM) Certified in Planning and Inventory Management Practice Test

CPIM Inventory Management 4