CPIM Practice Exam

What does effective inventory management aim to eliminate?

1. Employee turnover

2. Waste and inefficiencies

3. Market competition

4. Customer feedback

The correct answer is: Waste and inefficiencies

Effective inventory management focuses on streamlining operations to maintain optimal stock levels, ensuring that resources are utilized efficiently and costs are minimized. By targeting waste and inefficiencies, organizations can reduce excess inventory, lower carrying costs, and avoid stockouts or overstock situations. This approach leads to better cash flow, improved service levels, and enhanced overall productivity. In the context of inventory management, waste could refer to various forms of unnecessary expenditures, such as holding costs for items that are not moving or losses incurred through spoilage or obsolescence. By identifying and eliminating these inefficiencies, companies can drive down costs and improve their responsiveness to customer demand. Understanding what effective inventory management aims to eliminate helps supply chain professionals implement strategies that optimize their operations and better align inventory with market needs.