CPPB Inventory Management

Question 1

Which inventory valuation method assumes that the most recently purchased items are the first to be used or sold?

Accepted Answer

Last In, First Out (LIFO)

Answer

First In, First Out (FIFO)

Answer

Weighted Average Cost

Answer

Specific Identification

Question 2

The Economic Order Quantity (EOQ) model is used to determine which of the following?

Accepted Answer

The optimal order quantity that minimizes total inventory costs

Answer

The optimal reorder point for an item

Answer

The maximum inventory level that should be maintained

Answer

The number of suppliers needed for a commodity

Question 3

In public procurement, a 'stockout' occurs when:

Accepted Answer

Demand cannot be met due to insufficient inventory on hand

Answer

Inventory exceeds maximum storage capacity

Answer

An item is available but not yet requisitioned

Answer

A vendor fails to deliver within the lead time

Question 4

ABC analysis in inventory management classifies items primarily based on:

Accepted Answer

Annual consumption value

Answer

Alphabetical order of item names

Answer

Physical size and storage requirements

Answer

Frequency of vendor deliveries

Question 5

What is the primary purpose of safety stock in a public agency's inventory system?

Accepted Answer

To serve as a buffer against unexpected demand or supply delays

Answer

To reduce the number of purchase orders issued

Answer

To comply with minimum stocking requirements set by law

Answer

To take advantage of vendor quantity discount pricing

Question 6

Which of the following best describes a 'perpetual inventory system'?

Accepted Answer

Inventory records are updated continuously with each transaction

Answer

Inventory is counted and reconciled once a year

Answer

Inventory is ordered on a fixed schedule regardless of stock levels

Answer

Inventory is managed exclusively by a third-party logistics provider

Question 7

The reorder point (ROP) for an inventory item is calculated using which formula?

Accepted Answer

ROP = Safety Stock + (Average Daily Usage × Lead Time)

Answer

ROP = EOQ / Average Daily Usage

Answer

ROP = Maximum Usage × Maximum Lead Time

Answer

ROP = Annual Demand / Number of Orders