CPIM Inventory Planning & Control Strategies

Question 1

What is the primary goal of inventory planning?

Accepted Answer

To optimize stock levels and meet customer demand

Answer

The primary goal of inventory planning is to strike an optimal balance between meeting customer demand and minimizing inventory-related costs. This involves determining appropriate stock levels, order quantities, and reorder points to ensure product availability without incurring excessive holding costs or risking stockouts. Effective planning supports sales and operational efficiency.

Question 2

Which of the following is a common inventory control technique?

Accepted Answer

Fixed-period ordering

Answer

Fixed-period ordering, also known as the periodic review system, is an inventory control technique where inventory levels are checked at regular, predetermined intervals. At each review, an order is placed to bring the inventory up to a target level. This contrasts with fixed-quantity systems that trigger orders when stock reaches a specific reorder point.

Question 3

What does the Economic Order Quantity (EOQ) model help determine?

Accepted Answer

Optimal order quantity that minimizes total inventory costs

Answer

The Economic Order Quantity (EOQ) model is a formula used to determine the ideal order size that minimizes the total cost of inventory. This total cost includes both the ordering costs (cost to place an order) and the holding costs (cost to store inventory). By finding this optimal quantity, businesses can reduce their overall inventory expenses.

Question 4

Which inventory strategy aims to reduce inventory levels while ensuring availability?

Accepted Answer

Just-In-Time (JIT)

Answer

Just-In-Time (JIT) is an inventory strategy focused on receiving goods and materials only as they are needed for production or sale. Its core aim is to significantly reduce inventory holding costs and waste by minimizing stock levels. JIT ensures availability precisely when required, demanding highly coordinated supply chains.

Question 5

What is the primary function of safety stock?

Accepted Answer

To protect against stockouts and demand fluctuations

Answer

Safety stock is an additional quantity of inventory held to protect against unexpected fluctuations in demand or supply lead times. It acts as a buffer, preventing stockouts and ensuring that customer orders can still be fulfilled even if actual demand exceeds forecasts or if there are delays in replenishment. This helps maintain desired service levels.

(CPIM) Certified in Planning and Inventory Management Practice Test

(CPIM) Certified in Planning and Inventory Management Practice Test

CPIM Inventory Planning & Control Strategies