CPPB Inventory Management 5

Question 1

A state agency stocks road salt but faces unpredictable winter storms and long supplier lead times. Which factor should MOST increase its safety stock level?

Accepted Answer

High variability in demand and lead time

Answer

Safety stock buffers uncertainty, so greater variability in demand or lead time requires more safety stock.

Question 2

Which of the following is generally included in inventory carrying (holding) costs?

Accepted Answer

Storage space, insurance, obsolescence, and cost of capital

Answer

Carrying costs cover the expense of holding stock, including space, insurance, shrinkage, obsolescence, and capital tied up.

Question 3

Under Vendor-Managed Inventory (VMI), what is the supplier's primary responsibility?

Accepted Answer

Monitoring the agency's stock levels and replenishing as needed

Answer

In VMI, the supplier uses shared usage data to monitor levels and replenish stock within agreed limits.

Question 4

A public works storeroom uses a min/max system with a minimum of 50 and maximum of 200 units. Stock falls to 45 units. How many units should typically be ordered?

Accepted Answer

155 units

Answer

Once stock hits or drops below the minimum, the order brings it back to the maximum: 200 − 45 = 155.

Question 5

Inventory shrinkage in a government warehouse refers to:

Accepted Answer

Loss of inventory from theft, damage, spoilage, or recording errors

Answer

Shrinkage is the unexplained difference between recorded and actual inventory caused by theft, damage, or errors.

CPPB - Certified Professional Public Buyer Practice Test

CPPB - Certified Professional Public Buyer Practice Test

CPPB Inventory Management 5