CPIM Inventory Management and Control 2

Question 1

What does EOQ stand for in inventory management?

Accepted Answer

Economic Order Quantity

Answer

Estimated Output Quality

Answer

Efficient Order Queue

Answer

External Order Quantity

Question 2

The EOQ formula minimizes the total of which two types of costs?

Accepted Answer

Ordering costs and carrying costs

Answer

Stockout costs and carrying costs

Answer

Setup costs and stockout costs

Answer

Purchase costs and ordering costs

Question 3

In a fixed-order-quantity (Q) system, what triggers a replenishment order?

Accepted Answer

Inventory falling to a predetermined reorder point

Answer

A fixed time period elapsing

Answer

Available production capacity

Answer

A change in the sales forecast

Question 4

What is the basic formula for the reorder point (ROP) when demand and lead time are known?

Accepted Answer

ROP = Average daily demand × Lead time + Safety stock

Answer

ROP = EOQ ÷ Lead time

Answer

ROP = Safety stock × Lead time

Answer

ROP = Annual demand ÷ Order frequency

Question 5

Which lot sizing technique orders exactly the quantity needed to satisfy net requirements for each period?

Accepted Answer

Lot-for-Lot (L4L)

Answer

Fixed order quantity

Answer

Economic Order Quantity

Answer

Period Order Quantity

Question 6

In a periodic review (P) inventory system, what element varies each review cycle?

Accepted Answer

The order quantity

Answer

The time between reviews

Answer

The reorder point

Answer

The safety stock level

Question 7

Which inventory valuation method assumes the most recently purchased items are consumed first?

Accepted Answer

LIFO (Last In, First Out)

Answer

FIFO (First In, First Out)

Answer

Weighted average cost

Answer

Standard cost