CPM Inventory and Materials Management Flashcards
6 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CPM Inventory and Materials Management flashcards as text
Which of the following best describes 'carrying cost' of inventory?
Answer: Expenses associated with holding inventory over time, including storage and obsolescence
Carrying (or holding) costs include storage, insurance, obsolescence, and the opportunity cost of capital tied up in inventory.
In materials management, what does MRP stand for?
Answer: Material Requirements Planning
MRP (Material Requirements Planning) is a system that calculates the materials and components needed to manufacture a product.
What is the purpose of a 'physical inventory count'?
Answer: To verify that recorded inventory quantities match actual on-hand stock
A physical inventory count reconciles the actual quantities on the shelf with what is recorded in the inventory management system.
Which metric measures how many times inventory is sold and replaced over a given period?
Answer: Inventory turnover ratio
The inventory turnover ratio indicates how efficiently inventory is managed by showing how often it is sold and restocked within a period.
What is 'consignment inventory' in a purchasing context?
Answer: Inventory held by the buyer but owned by the supplier until it is used or sold
Consignment inventory remains the supplier's property until the buyer uses it, reducing the buyer's upfront capital investment.
What does 'cycle counting' involve in inventory management?
Answer: Continuously counting a subset of inventory on a rotating schedule
Cycle counting is an ongoing auditing process where different portions of inventory are counted on a rotating basis throughout the year.