CPIM Inventory Planning & Control Strategies 5

Question 1

A retailer experiences significantly higher demand in Q4 due to the holiday season. Which inventory strategy should be used to prepare?

Accepted Answer

Build anticipation inventory in advance of the demand peak

Answer

Reduce safety stock levels in Q3 to cut costs

Answer

Switch from continuous to periodic review during Q4

Answer

Increase the EOQ calculation frequency

Question 2

What is the 'bullwhip effect' in supply chain inventory management?

Accepted Answer

The amplification of demand variability as orders move upstream through the supply chain

Answer

The tendency for inventory accuracy to decrease upstream in the supply chain

Answer

The reduction of lead times as technology improves

Answer

The effect of discounts on increasing order frequency

Question 3

Which technique aggregates individual SKU forecasts into a product family or group forecast to improve overall planning accuracy?

Accepted Answer

Hierarchical forecasting

Answer

Disaggregation

Answer

Exponential smoothing

Answer

Causal forecasting

Question 4

In an MRP system, what is 'gross requirements'?

Accepted Answer

The total demand for an item from all sources before considering available inventory

Answer

The quantity on hand before any adjustments

Answer

The net demand after subtracting on-hand inventory and scheduled receipts

Answer

The safety stock quantity for a given item

Question 5

A company reduces its order quantity from 500 to 250 units. Assuming demand is constant, what happens to average cycle stock?

Accepted Answer

Average cycle stock is halved

Answer

Average cycle stock doubles

Answer

Average cycle stock remains the same

Answer

Average cycle stock decreases by 25%

Question 6

Which approach calculates a replenishment quantity by multiplying daily demand by a target number of days of supply?

Accepted Answer

Days-of-supply (DOS) method

Answer

Economic order quantity method

Answer

Lot-for-lot method

Answer

Periodic order quantity method

Question 7

What distinguishes a 'push' inventory replenishment system from a 'pull' system?

Accepted Answer

Push systems produce and ship based on forecasts; pull systems respond to actual consumption signals

Answer

Push systems replenish based on actual downstream demand signals; pull systems use forecasts

Answer

Push systems use kanban cards; pull systems use MRP

Answer

Push systems apply to finished goods only; pull systems apply to raw materials