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 inventory management technique classifies items into three categories (A, B, and C) based on their annual dollar value?
Answer: ABC analysis
ABC analysis categorizes inventory by annual dollar usage so purchasing managers can focus control efforts on high-value 'A' items.
What does the term 'Economic Order Quantity' (EOQ) represent in inventory management?
Answer: The order size that minimizes total holding and ordering costs
EOQ is the optimal order size that minimizes the sum of ordering costs and inventory holding costs.
What is 'safety stock' in inventory management?
Answer: Buffer inventory held to protect against demand or supply uncertainty
Safety stock is extra inventory held as a cushion against unexpected demand spikes or supplier delivery delays.
Which inventory valuation method assumes the most recently received goods are sold first?
Answer: LIFO
LIFO (Last-In, First-Out) assumes the newest inventory items are used or sold before older ones.
What is the primary goal of Just-In-Time (JIT) inventory management?
Answer: Reduce inventory carrying costs by receiving goods only as needed
JIT aims to minimize inventory on hand by synchronizing deliveries with production or use schedules, reducing carrying costs.
What is the 'reorder point' (ROP) in inventory management?
Answer: The quantity at which a new order must be placed to avoid stockout
The reorder point is the inventory level that triggers a new purchase order, calculated to cover demand during the supplier lead time.