CPSM Inventory Management 4

Question 1

Under vendor-managed inventory (VMI), who is responsible for replenishment decisions?

Accepted Answer

The supplier

Answer

In VMI, the supplier monitors the buyer's inventory levels and decides when and how much to replenish.

Question 2

Which measure expresses the probability that all customer demand during a replenishment cycle will be filled from available stock?

Accepted Answer

Cycle service level

Answer

Cycle service level is the probability of not stocking out during a single replenishment cycle.

Question 3

A 'two-bin' replenishment system is a practical implementation of which inventory control approach?

Accepted Answer

Continuous review (Q system)

Answer

The two-bin system triggers a fixed replenishment order when the first bin is emptied, embodying the continuous review Q-system logic.

Question 4

Which carrying cost component represents the opportunity cost of funds tied up in inventory?

Accepted Answer

Capital (interest) cost

Answer

Capital cost reflects the return foregone by investing money in inventory rather than in other opportunities.

Question 5

What is the primary advantage of cross-docking in a distribution network?

Accepted Answer

Eliminates or minimizes storage time by transferring goods directly from inbound to outbound

Answer

Cross-docking transfers products from receiving docks directly to shipping docks, reducing or eliminating warehouse storage time.

(CPSM) Certified Professional in Supply Management Practice Test