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

Days of supply measures how long current inventory will satisfy demand, calculated as on-hand inventory divided by average daily usage.

Question 2

The 'inventory turnover ratio' is calculated as:

Accepted Answer

Cost of goods sold divided by average inventory value

Answer

Inventory turnover measures how many times inventory is sold and replaced in a period; higher turns generally indicate better working capital efficiency.

Question 3

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

Accepted Answer

Safety stock

Answer

Safety stock is additional inventory held beyond cycle stock to protect against stockouts caused by demand variability or supply disruptions.

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

In consignment arrangements, the supplier retains ownership until the buyer uses or sells the goods, reducing the buyer's working capital requirements.

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

Effective E&O management identifies at-risk items early, investigates root causes, and implements structured disposition processes to recover value.

CSCP - Certified Supply Chain Professional Practice Test

CSCP - Certified Supply Chain Professional Practice Test

CSCP Inventory Management 2