E-Commerce Development Inventory Management

Question 1

What is a SKU in e-commerce inventory management?

Accepted Answer

A unique alphanumeric identifier assigned to each distinct product variant

Answer

A SKU (Stock Keeping Unit) is a unique alphanumeric identifier assigned to each distinct product variant so businesses can track inventory accurately.

Question 2

What does 'safety stock' refer to in inventory management?

Accepted Answer

Extra inventory kept on hand to prevent stockouts due to demand or supply fluctuations

Answer

Safety stock is buffer inventory maintained above expected demand to prevent stockouts when demand spikes or supplier shipments are delayed.

Question 3

Which inventory valuation method assigns the cost of the most recently purchased items to cost of goods sold (COGS)?

Accepted Answer

LIFO (Last In, First Out)

Answer

LIFO (Last In, First Out) assigns the cost of the newest inventory to COGS, meaning recently purchased items are treated as sold first for accounting purposes.

Question 4

What is a reorder point in inventory management?

Accepted Answer

The inventory level at which a new purchase order should be triggered

Answer

The reorder point is the inventory level that triggers a new purchase order, calculated to ensure new stock arrives before current inventory is exhausted.

Question 5

What does 'dead stock' mean in e-commerce?

Accepted Answer

Unsold inventory that is no longer expected to generate sales

Answer

Dead stock refers to inventory that has not sold and is unlikely to sell, tying up capital and storage space without generating revenue.

E-Commerce Development Practice Test

E-Commerce Development Practice Test

E-Commerce Development Inventory Management