Inventory Management & Supply Chain Flashcards
7 cards from real CPT 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 & Supply Chain flashcards as text
A Bill of Materials (BOM) primarily documents:
Answer: All raw materials, components, and subassemblies needed to produce a product
A BOM is a structured list of every material, component, and subassembly required to manufacture a finished product, serving as a foundation for procurement and production planning.
Material Requirements Planning (MRP) is primarily used to:
Answer: Determine what materials are needed, in what quantities, and when to order them
MRP uses production schedules and BOMs to calculate material requirements and generate purchase or work orders at the right time.
The primary cost disadvantage of holding excess inventory is:
Answer: Higher carrying costs including storage, insurance, and obsolescence risk
Excess inventory ties up capital and incurs ongoing carrying costs such as warehouse space, insurance, deterioration, and the risk of obsolescence.
Under 'FOB Destination' shipping terms, when does ownership transfer to the buyer?
Answer: When the goods are delivered to the buyer's specified location
FOB Destination means the seller retains title and risk of loss until goods physically arrive at the buyer's specified delivery location.
A 'stockout' occurs when:
Answer: Demand cannot be met because inventory has been fully depleted
A stockout means inventory has run out and customer demand or production requirements cannot be fulfilled until more stock arrives.
Kanban is a lean inventory tool that primarily uses:
Answer: Visual signals to trigger production or movement of materials
Kanban uses visual signals—such as cards, bins, or lights—to communicate when materials need to be replenished or when the next production step should begin.
Which warehouse practice ensures older inventory is picked and used before newer stock to reduce spoilage and obsolescence?
Answer: FIFO (First-In, First-Out) rotation
FIFO rotation ensures the oldest inventory is consumed first, minimizing spoilage, obsolescence, and quality degradation that occurs when items sit too long.