CSCP Inventory Management 2

Question 1

What is 'days of supply' (DOS) as an inventory metric?

Accepted Answer

The number of days the current inventory will last at the current rate of consumption

Answer

The average number of days a supplier takes to deliver

Answer

The number of days between inventory cycle counts

Answer

The days remaining before a product reaches its expiration date

Question 2

The 'inventory turnover ratio' is calculated as:

Accepted Answer

Cost of goods sold divided by average inventory value

Answer

Total sales revenue divided by ending inventory

Answer

Number of orders divided by total inventory items

Answer

Annual purchases divided by average accounts payable

Question 3

Which type of inventory is held to buffer against uncertainty in the supply chain?

Accepted Answer

Safety stock

Answer

Cycle stock

Answer

Pipeline inventory

Answer

Anticipation inventory

Question 4

What is 'consignment inventory'?

Accepted Answer

Inventory owned by the supplier but held at the buyer's location, paid for only when consumed or sold

Answer

Inventory held at a public warehouse on a temporary basis

Answer

Defective inventory returned to the supplier for credit

Answer

Inventory set aside for a specific customer order

Question 5

Excess and obsolete inventory is best managed through which approach?

Accepted Answer

Proactive monitoring of slow-moving items, root cause analysis, and liquidation or disposal programs

Answer

Increasing safety stock levels to use up excess

Answer

Moving all excess inventory to a third-party warehouse

Answer

Writing off obsolete items only at year-end financial close

Question 6

In a periodic review inventory system, orders are placed:

Accepted Answer

At fixed time intervals, with order quantity varying to bring inventory to a target level

Answer

Whenever inventory falls to the reorder point

Answer

Based on supplier lead time schedules

Answer

Only when stockouts occur