Inventory Management Flashcards
7 cards from real CPSM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Inventory Management flashcards as text
In supply chain management, 'shrinkage' refers to which type of inventory loss?
Answer: Unexplained loss due to theft, damage, or administrative errors
Shrinkage is unplanned inventory reduction from theft, damage, spoilage, or record-keeping errors.
Which replenishment strategy produces a 'saw-tooth' pattern in inventory level graphs?
Answer: Fixed-order-quantity (EOQ) system
EOQ systems show a saw-tooth pattern because inventory drops steadily as demand is met, then jumps back up when a fixed order arrives.
Which performance metric measures the percentage of line items or orders shipped complete on the first shipment attempt?
Answer: Fill rate
Fill rate measures the fraction of customer demand satisfied immediately from stock, often expressed per order line or per unit.
A pharmaceutical company prioritizes inventory based on criticality to patient care regardless of cost. This approach is called:
Answer: VED (Vital, Essential, Desirable) analysis
VED analysis classifies items by operational criticality rather than monetary value, making it common in healthcare and maintenance settings.
When demand is uncertain, increasing the desired service level from 90% to 99% has what effect on required safety stock?
Answer: Safety stock increases, but at a diminishing marginal rate
Safety stock grows with higher service levels but requires disproportionately larger amounts for each incremental percentage point near 100%.
Which inventory reduction technique involves sharing real-time demand and inventory data across supply chain partners to reduce safety stock needs?
Answer: Collaborative Planning, Forecasting and Replenishment (CPFR)
CPFR reduces uncertainty—and therefore safety stock—by enabling trading partners to collaborate on forecasts and replenishment plans using shared data.
What does a negative cash-to-cash (C2C) cycle time indicate for a retailer?
Answer: The company collects from customers before it must pay its suppliers
A negative C2C cycle means the retailer receives payment from customers before payment to suppliers is due, effectively using supplier credit to fund operations.