CWLP Inventory Management & Control 4 — Questions and Answers
Question 1: A warehouse experiences a stockout before the replenishment order arrives. This situation is best described as:
- Carrying cost overrun
- A backorder condition (Correct answer)
- Demand leveling failure
- Inventory compression
Correct answer: A backorder condition
A backorder occurs when customer demand exceeds available inventory, requiring the order to be fulfilled once stock is replenished.
Question 2: Which inventory performance metric measures the percentage of customer orders shipped completely on time from available stock?
- Inventory accuracy rate
- Order fill rate (Correct answer)
- Inventory turnover
- Carrying cost ratio
Correct answer: Order fill rate
Order fill rate is the percentage of orders fulfilled completely from on-hand inventory without backorders or substitutions.
Question 3: What is the main disadvantage of holding excessive safety stock?
- Increased stockout risk
- Higher carrying costs and tied-up capital (Correct answer)
- Reduced reorder frequency
- Lower supplier lead time
Correct answer: Higher carrying costs and tied-up capital
Excess safety stock increases carrying costs (storage, insurance, capital opportunity cost) without proportional service-level benefit.
Question 4: Which replenishment strategy sets a fixed order quantity triggered when inventory falls to a predetermined level?
- Fixed-period (P) system
- Fixed-quantity (Q) system (Correct answer)
- Just-in-Time replenishment
- Vendor-managed inventory
Correct answer: Fixed-quantity (Q) system
The fixed-quantity (Q) system orders the same amount (often EOQ) whenever inventory drops to the reorder point.
Question 5: In cross-docking operations, inventory control is critical because products typically:
- Are stored for extended periods in rack systems
- Move from inbound to outbound with little or no storage time (Correct answer)
- Require full cycle counting before shipment
- Must be repacked into new SKUs on arrival
Correct answer: Move from inbound to outbound with little or no storage time
Cross-docking transfers goods directly from receiving docks to outbound shipping with minimal or zero warehouse storage time.
Question 6: Which document serves as the primary record authorizing the movement of inventory out of a warehouse to a customer?
- Purchase order
- Bill of lading
- Pick list / sales order (Correct answer)
- Receiving report
Correct answer: Pick list / sales order
A pick list (derived from a sales order) authorizes warehouse staff to select and release specific inventory for customer shipment.
Question 7: When performing a physical inventory count, a 'blind count' method means that counters:
- Count in low-light conditions to reduce errors
- Do not receive expected quantity information before counting (Correct answer)
- Only count items flagged by the WMS as discrepant
- Skip items already verified by barcode scan
Correct answer: Do not receive expected quantity information before counting
Blind counting prevents bias by withholding expected quantities, forcing counters to record what they actually observe.
CWLP Inventory Management & Control 4
A warehouse experiences a stockout before the replenishment order arrives.
This situation is best described as: