CPIM Practice Exam

What best describes transportation inventory?

1. Inventory sold to customers

2. Inventory that is in transit between locations

3. Stock that has been discontinued

4. Inventory on hold for quality checks

The correct answer is: Inventory that is in transit between locations

Transportation inventory is accurately described as inventory that is in transit between locations. This refers to goods that have been shipped from a supplier but have not yet arrived at their final destination, whether that is a warehouse, distribution center, or retail outlet. During this phase, the inventory is still considered part of the overall stock of the organization, even though it is physically moving and not yet available for sale or use. Transportation inventory plays a critical role in supply chain management as it reflects the time lag between the ordering and receiving of products. Managing this type of inventory effectively is essential to maintaining the flow within the supply chain and ensuring that there are no disruptions in inventory availability. The inventory is counted in inventory reports and has implications for managing working capital since it represents goods that are still in motion. Understanding transportation inventory helps supply chain professionals optimize logistics, reduce lead times, and improve overall operational efficiency.