CPIM Practice Exam

Cycle stock is characterized as:

1. The least active part of inventory

2. The most active component of inventory

3. Inventory that is never used

4. Stock reserved for special projects

The correct answer is: The most active component of inventory

Cycle stock is defined as the portion of inventory that is used to meet normal or expected demand within a given time period. This type of stock is specifically tied to the routine replenishment of goods, essentially reflecting the inventory that a company cycles through frequently due to regular customer orders. Understanding cycle stock is crucial for effective inventory management, as it helps organizations maintain a balance between having enough stock to meet demand while minimizing excess inventory that could lead to increased carrying costs. The characterization of cycle stock as the most active component of inventory underscores its role in the daily operations of a business. It is the inventory that moves in and out consistently as sales occur and products are replenished, making it essential for maintaining a smooth supply chain process. In contrast to other types of inventory, cycle stock is not meant to sit idle; its active management is key to optimizing efficiency and responsiveness to market demand.