Inventory Management Flashcards
6 cards from real Supply Chain and Logistics practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Inventory Management flashcards as text
What is cycle counting?
Answer: Counting a rotating subset of inventory items on a regular schedule
Cycle counting replaces full physical inventory counts by regularly auditing small portions of inventory throughout the year.
Which inventory valuation method results in the lowest net income during rising prices?
Answer: LIFO
LIFO (Last In, First Out) reports the most recently purchased (higher-cost) goods as sold first, increasing COGS and reducing net income during inflation.
What does VMI stand for in supply chain management?
Answer: Vendor-Managed Inventory
Vendor-Managed Inventory (VMI) allows suppliers to monitor and replenish a buyer's inventory levels without requiring purchase orders.
What is the formula for Days Inventory Outstanding (DIO)?
Answer: (Average Inventory / COGS) × 365
DIO measures how many days on average a company holds inventory before selling it, calculated as (Average Inventory / COGS) × 365.
What is a bill of materials (BOM)?
Answer: A comprehensive list of raw materials and components needed to manufacture a product
A bill of materials specifies all components, sub-assemblies, and quantities required to produce a finished product.
Which inventory strategy reduces risk by stocking products closest to confirmed demand?
Answer: Pull strategy
A pull strategy only replenishes inventory in response to actual customer demand signals, reducing overstock and waste.