CPIM Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the CPIM Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

How is the days of supply calculated?

Average daily sales/inventory on hand
Inventory on hand/average daily usage
Inventory on hand*average daily usage
Average daily usage/inventory on hand

The correct answer is: Inventory on hand/average daily usage

The correct method for calculating days of supply is to divide the inventory on hand by the average daily usage. This calculation helps determine how many days the current inventory will last given the current rate of consumption. By taking inventory on hand, you're assessing the actual stock available, and by dividing by average daily usage, you're establishing an understanding of how quickly that stock is used in a typical day. This quantifies the supply situation and aids in inventory management decisions, ensuring that you can maintain adequate stock levels without overstocking. In contrast, other methods listed do not accurately represent how long inventory will last. For instance, multiplying inventory on hand by average daily usage would yield a figure not relevant to supply duration. Similarly, using average daily sales or dividing daily usage by inventory on hand would not provide meaningful insight into how many days the existing supply can cover. Understanding this correct approach is critical for effective supply chain and inventory management.