CPIM Inventory Planning & Control Strategies 2

Question 1

A company notices its inventory turnover ratio has decreased from 8 to 5 over the past year. What does this most likely indicate?

Accepted Answer

Excess inventory is being held relative to sales

Answer

Inventory is being sold and replaced more quickly

Answer

The company has reduced its carrying costs

Answer

Demand forecasting accuracy has improved

Question 2

Which inventory classification method assigns items to categories A, B, or C based on annual dollar usage?

Accepted Answer

ABC analysis

Answer

XYZ analysis

Answer

FSN analysis

Answer

VED analysis

Question 3

In a periodic review system, what is determined at each review interval?

Accepted Answer

The order quantity needed to bring inventory to a target level

Answer

The reorder point

Answer

The economic order quantity

Answer

The safety stock level only

Question 4

Which cost is NOT typically included in inventory carrying costs?

Accepted Answer

Setup or ordering cost

Answer

Obsolescence cost

Answer

Storage and warehousing cost

Answer

Insurance cost

Question 5

A product has a demand of 500 units/week with a lead time of 3 weeks and a safety stock of 200 units. What is the reorder point?

Accepted Answer

1,700 units

Answer

1,500 units

Answer

700 units

Answer

500 units

Question 6

Which inventory model assumes that the entire order quantity arrives at once and demand is continuous?

Accepted Answer

Basic EOQ model

Answer

Production order quantity model

Answer

Newsvendor model

Answer

Wagner-Whitin model

Question 7

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

Accepted Answer

To trigger replenishment when stock falls to a minimum and order up to a maximum level

Answer

To optimize economic order quantities across all SKUs

Answer

To synchronize inventory with production schedules

Answer

To eliminate safety stock requirements