CPIM Practice Exam

What does a visual review system in inventory management rely on?

1. Sales forecasts and historical trends

2. Automated inventory counts and software

3. Physical observation of inventory levels

4. Complex algorithms for inventory turnover

The correct answer is: Physical observation of inventory levels

A visual review system in inventory management primarily relies on the physical observation of inventory levels. This method enables managers to assess stock quantities and conditions at a glance, facilitating quick decision-making regarding replenishment or adjustments in inventory management strategies. By visually inspecting the inventory, organizations can identify discrepancies, spot trends, and react to changes in demand more effectively without needing complex calculations or automated systems. While sales forecasts and historical trends can inform inventory practices, they do not directly relate to the visual inspection aspect fundamental to a visual review system. Automated inventory counts and software focus on electronic tracking methods, which contrasts with the hands-on observation characteristic of visual systems. Similarly, complex algorithms for inventory turnover utilize statistical data rather than the straightforward, intuitive nature of visual checks.