CPIM Practice Exam

Anticipation inventories are primarily built up to address:

1. Budget constraints

2. Seasonal demand variations

3. Quality control issues

4. Low stock levels

The correct answer is: Seasonal demand variations

Anticipation inventories are primarily built up to address seasonal demand variations. This strategy involves storing additional inventory in advance of expected increases in demand driven by seasonal factors. For example, retailers might increase their stock of winter clothing in anticipation of higher sales during the colder months or a festive season. This proactive approach allows businesses to meet customer demand without delay, avoiding stockouts during peak periods when demand is expected to surge. By having this inventory ready ahead of time, companies can achieve higher customer satisfaction and maintain sales levels during critical sales windows. In contrast, while budget constraints, quality control issues, and low stock levels are important considerations in inventory management, they do not specifically relate to the purpose of building anticipation inventories. Budget constraints pertain more to financial planning, quality control issues involve ensuring the integrity and standards of products, and low stock levels refer to immediate supply concerns. All these factors may impact overall inventory strategy, but they do not define the concept of anticipation inventory, which is focused on preparing for predictable changes in demand patterns.