CPP Inventory & Logistics Management Flashcards
6 cards from real CPP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 CPP Inventory & Logistics Management flashcards as text
What is the Economic Order Quantity (EOQ)?
Answer: The optimal order size that minimizes total inventory costs by balancing ordering and holding costs
EOQ is the formula-derived order quantity that minimizes the combined costs of placing orders and holding inventory.
What is 'safety stock' in inventory management?
Answer: Extra inventory held as a buffer against demand variability or supply delays
Safety stock is buffer inventory maintained above expected demand to prevent stockouts caused by unexpected demand surges or supply chain delays.
What does 'ABC analysis' categorize in inventory management?
Answer: Inventory items by value and usage frequency to prioritize management efforts
ABC analysis classifies inventory into three groups—A (high value), B (medium value), C (low value)—to focus control and attention where it delivers the most benefit.
What is the 'reorder point' in inventory management?
Answer: The inventory level at which a new purchase order should be placed to avoid a stockout
The reorder point is the on-hand inventory level that triggers a new order, calculated from lead time demand plus safety stock.
What does FIFO stand for in inventory valuation?
Answer: First In, First Out
FIFO (First In, First Out) is an inventory costing method where the oldest units purchased are assumed to be the first ones sold or used.
What is 'cycle counting' in inventory management?
Answer: Continuously counting a rotating subset of inventory items to maintain ongoing accuracy without a full shutdown
Cycle counting involves regularly counting a small subset of items on a rotating schedule to maintain inventory accuracy without disrupting daily operations.