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 production facility uses a two-bin system for managing fastener inventory. What triggers a replenishment order in this system?
Answer: When the second bin is opened
In a two-bin system, opening the second bin signals that a replenishment order should be placed while the second bin supplies demand during lead time.
Which metric best measures how efficiently a company converts inventory investment into sales revenue?
Answer: Inventory Turnover Ratio
Inventory Turnover Ratio (COGS ÷ Average Inventory) measures how many times inventory is sold and replaced in a period, indicating conversion efficiency.
A supplier consistently delivers materials two days earlier than the agreed lead time. How does this affect the buyer's safety stock calculation?
Answer: Safety stock can be reduced since lead time variability decreased
Lower lead time variability reduces the uncertainty that safety stock must buffer, allowing a reduction in safety stock levels.
What is the primary purpose of a Material Requirements Planning (MRP) system in production?
Answer: To determine what materials are needed, in what quantity, and when
MRP calculates material requirements by working backward from the master production schedule to determine quantities and timing for components and raw materials.
A plant manager notices that cycle count results consistently differ from system records for items stored near shipping docks. What is the most likely root cause?
Answer: Receiving transactions not posted before items are moved
Items moved before receiving transactions are posted create a discrepancy between physical inventory and system records, a common issue in high-traffic dock areas.
Which supply chain strategy involves holding minimal finished goods inventory and producing only in response to actual customer orders?
Answer: Make-to-Order (MTO)
Make-to-Order produces goods only after receiving a customer order, minimizing finished goods inventory but typically resulting in longer customer lead times.
What does a high 'Days on Hand' (DOH) inventory metric typically indicate about a production operation?
Answer: Excess inventory that ties up working capital
High Days on Hand indicates inventory is held for longer before use or sale, tying up working capital and increasing carrying costs such as storage, insurance, and obsolescence risk.