CPM CPM Inventory and Materials Management

Question 1

Which inventory management technique classifies items into three categories (A, B, and C) based on their annual dollar value?

Accepted Answer

ABC analysis

Answer

FIFO method

Answer

Safety stock analysis

Answer

Reorder point method

Question 2

What does the term 'Economic Order Quantity' (EOQ) represent in inventory management?

Accepted Answer

The order size that minimizes total holding and ordering costs

Answer

The maximum amount that can be stored

Answer

The safety stock level required

Answer

The lead time demand quantity

Question 3

What is 'safety stock' in inventory management?

Accepted Answer

Buffer inventory held to protect against demand or supply uncertainty

Answer

Stock reserved for key customers

Answer

Items kept for quality inspection

Answer

Minimum order quantity from a supplier

Question 4

Which inventory valuation method assumes the most recently received goods are sold first?

Accepted Answer

LIFO

Answer

FIFO

Answer

Weighted average

Answer

Standard cost

Question 5

What is the primary goal of Just-In-Time (JIT) inventory management?

Accepted Answer

Reduce inventory carrying costs by receiving goods only as needed

Answer

Maximize warehouse capacity

Answer

Increase safety stock levels

Answer

Standardize all supplier lead times

Question 6

What is the 'reorder point' (ROP) in inventory management?

Accepted Answer

The quantity at which a new order must be placed to avoid stockout

Answer

The maximum inventory level allowed

Answer

The economic order quantity for replenishment

Answer

The point when inventory is considered obsolete