Master Brewer Certification Inventory Management & Supply Chain 2 — Questions and Answers
Question 1: Which inventory valuation method assigns the cost of the most recently purchased raw materials to the cost of goods sold first?
- FIFO
- LIFO (Correct answer)
- Weighted average cost
- Specific identification
Correct answer: LIFO
LIFO (Last-In, First-Out) assigns the cost of the newest inventory to COGS first, though it is not permitted under IFRS.
Question 2: A brewery negotiates a contract where the hop supplier delivers a fixed quantity every two weeks regardless of current stock levels. This is an example of which replenishment strategy?
- Reorder point system
- Fixed-interval replenishment (Correct answer)
- Just-in-time delivery
- Vendor-managed inventory
Correct answer: Fixed-interval replenishment
Fixed-interval replenishment triggers orders on a predetermined schedule rather than when stock falls to a set level.
Question 3: What term describes the phenomenon where small fluctuations in end-consumer beer demand cause increasingly large swings in orders upstream through distributors, wholesalers, and malt suppliers?
- Demand smoothing
- Bullwhip effect (Correct answer)
- Kanban amplification
- Forecast bias
Correct answer: Bullwhip effect
The bullwhip effect describes how demand variability is amplified as orders move up the supply chain.
Question 4: A master brewer wants to reduce the risk of spoilage in dry hop inventory. Which storage condition is MOST critical to maintain?
- High humidity above 70% RH
- Low temperature (32–38°F) and low oxygen (Correct answer)
- Ambient temperature with UV light exposure
- High CO2 atmosphere above 50 psi
Correct answer: Low temperature (32–38°F) and low oxygen
Hops degrade rapidly when exposed to heat and oxygen, so cold, oxygen-free storage is essential to preserve alpha acid content.
Question 5: When evaluating a new malt supplier, which document confirms the lot-specific protein content, extract yield, and moisture of each shipment?
- Certificate of Analysis (COA) (Correct answer)
- Material Safety Data Sheet (MSDS)
- Bill of Lading
- Purchase Order Acknowledgment
Correct answer: Certificate of Analysis (COA)
A Certificate of Analysis provides lab-verified quality parameters for each specific batch of ingredient received.
Question 6: A brewery uses a min-max inventory system for cleaning chemicals. The 'max' level is calculated to prevent which outcome?
- Stockout during lead time
- Excessive carrying costs and storage hazards (Correct answer)
- Supplier price increases
- Production schedule delays
Correct answer: Excessive carrying costs and storage hazards
The maximum level caps inventory to avoid over-investment in working capital and safety/storage issues from excess hazardous materials.
Question 7: Which metric measures how many times a brewery's total ingredient inventory is sold and replaced over a given period?
- Days Sales Outstanding (DSO)
- Inventory turnover ratio (Correct answer)
- Gross margin return on investment
- Economic order quantity
Correct answer: Inventory turnover ratio
Inventory turnover ratio equals COGS divided by average inventory value, showing how efficiently stock is being consumed.
Master Brewer Certification Inventory Management & Supply Chain 2
Which inventory valuation method assigns the cost of the most recently purchased raw materials to the cost of goods sold first?