CPP CPP Inventory & Logistics Management

Question 1

What is the Economic Order Quantity (EOQ)?

Accepted Answer

The optimal order size that minimizes total inventory costs by balancing ordering and holding costs

Answer

The maximum stock level permitted in a warehouse

Answer

The quantity discount threshold offered by suppliers

Answer

The average monthly consumption rate for an item

Question 2

What is 'safety stock' in inventory management?

Accepted Answer

Extra inventory held as a buffer against demand variability or supply delays

Answer

Hazardous materials stored in a segregated area

Answer

Stock reserved exclusively for priority customers

Answer

Inventory set aside for annual audit purposes

Question 3

What does 'ABC analysis' categorize in inventory management?

Accepted Answer

Inventory items by value and usage frequency to prioritize management efforts

Answer

Supplier performance ratings into three tiers

Answer

Product defect rates by category

Answer

Warehouse bin locations by zone

Question 4

What is the 'reorder point' in inventory management?

Accepted Answer

The inventory level at which a new purchase order should be placed to avoid a stockout

Answer

The maximum allowable inventory level for a given item

Answer

The minimum order quantity required by a supplier

Answer

The threshold at which obsolete stock is written off

Question 5

What does FIFO stand for in inventory valuation?

Accepted Answer

First In, First Out

Answer

Fixed Inventory, Fixed Output

Answer

Forecast Inventory From Orders

Answer

Freight In, Freight Out

Question 6

What is 'cycle counting' in inventory management?

Accepted Answer

Continuously counting a rotating subset of inventory items to maintain ongoing accuracy without a full shutdown

Answer

Counting all inventory items once per calendar year

Answer

Tracking inventory movement through each production cycle

Answer

Recording stock levels at the close of every sales cycle