CPP Inventory & Logistics Management Flashcards

What is a 'stockout' in inventory management?

Answer: A situation where inventory is depleted and customer demand cannot be fulfilled

A stockout occurs when available inventory reaches zero and incoming orders or demand cannot be fulfilled, potentially resulting in lost sales.

What is the primary purpose of a Warehouse Management System (WMS)?

Answer: To optimize warehouse operations including inventory tracking, receiving, storage, and order fulfillment

A WMS is software that manages and optimizes all warehouse activities including inventory tracking, space utilization, labor management, and order fulfillment.

What is 'cross-docking' in logistics?

Answer: Transferring goods directly from inbound transportation to outbound transportation with minimal or no storage time

Cross-docking moves products directly from receiving docks to outbound shipping docks, virtually eliminating warehousing time and reducing handling costs.

What does 'lead time' mean in procurement and logistics?

Answer: The total elapsed time from placing a purchase order to receiving the goods

Lead time is the total time from when a purchase order is issued until the ordered goods are received and available for use.

What is the core principle of 'just-in-time' (JIT) inventory?

Answer: Receiving goods as close as possible to when they are actually needed to minimize holding costs

JIT is an inventory strategy where materials arrive precisely when needed, minimizing storage costs, waste, and working capital tied up in stock.

What is 'inventory shrinkage'?

Answer: Inventory loss caused by theft, damage, miscounting, or administrative errors

Inventory shrinkage is the gap between recorded inventory and actual on-hand inventory, caused by theft, damage, vendor fraud, or clerical errors.