CPSM Inventory Management 5

Question 1

In supply chain management, 'shrinkage' refers to which type of inventory loss?

Accepted Answer

Unexplained loss due to theft, damage, or administrative errors

Answer

Shrinkage is unplanned inventory reduction from theft, damage, spoilage, or record-keeping errors.

Question 2

Which replenishment strategy produces a 'saw-tooth' pattern in inventory level graphs?

Accepted Answer

Fixed-order-quantity (EOQ) system

Answer

EOQ systems show a saw-tooth pattern because inventory drops steadily as demand is met, then jumps back up when a fixed order arrives.

Question 3

Which performance metric measures the percentage of line items or orders shipped complete on the first shipment attempt?

Accepted Answer

Fill rate

Answer

Fill rate measures the fraction of customer demand satisfied immediately from stock, often expressed per order line or per unit.

Question 4

A pharmaceutical company prioritizes inventory based on criticality to patient care regardless of cost. This approach is called:

Accepted Answer

VED (Vital, Essential, Desirable) analysis

Answer

VED analysis classifies items by operational criticality rather than monetary value, making it common in healthcare and maintenance settings.

Question 5

When demand is uncertain, increasing the desired service level from 90% to 99% has what effect on required safety stock?

Accepted Answer

Safety stock increases, but at a diminishing marginal rate

Answer

Safety stock grows with higher service levels but requires disproportionately larger amounts for each incremental percentage point near 100%.

(CPSM) Certified Professional in Supply Management Practice Test