CWLP Inventory Management & Control 2

Question 1

Which inventory valuation method assigns the most recent purchase costs to cost of goods sold during periods of rising prices?

Accepted Answer

LIFO

Answer

LIFO (Last-In, First-Out) assigns the most recent—and typically highest—costs to COGS during inflationary periods, reducing taxable income.

Question 2

A warehouse has 500 units on hand, uses 50 units per day, and lead time is 4 days. What is the reorder point if no safety stock is carried?

Accepted Answer

200 units

Answer

Reorder point = daily usage × lead time = 50 × 4 = 200 units.

Question 3

What does the term 'shrinkage' refer to in warehouse inventory management?

Accepted Answer

Inventory loss due to theft, damage, or errors

Answer

Shrinkage is the loss of inventory between purchase and sale due to theft, administrative errors, supplier fraud, or damage.

Question 4

Which metric measures how efficiently a warehouse converts inventory investment into sales revenue?

Accepted Answer

Inventory turnover ratio

Answer

Inventory turnover ratio (COGS ÷ average inventory) measures how many times inventory is sold and replaced in a period.

Question 5

In a periodic inventory system, physical counts are performed:

Accepted Answer

At scheduled intervals (e.g., monthly or annually)

Answer

A periodic system updates inventory records only at scheduled intervals rather than after each individual transaction.

(CWLP) Certified Warehouse and Logistics Professional Practice Test