CPIM Practice Exam

What does inventory management focus on?

1. Managing customer relationships

2. Planning and controlling inventories

3. Financial forecasting

4. Human resource planning

The correct answer is: Planning and controlling inventories

Inventory management is primarily concerned with planning and controlling inventories to ensure that a business has the right amount of stock available at the right time. This involves several key aspects, including determining optimal inventory levels, managing stock replenishment, minimizing holding costs, and reducing stockouts or overstock situations. Effective inventory management helps businesses maintain a balance between supply and demand, ensuring efficient operations and improving customer satisfaction. By focusing on these elements, inventory management directly contributes to the overall efficiency and profitability of supply chain operations. The other options, while important in their respective domains, do not specifically relate to the core functions of inventory management. Managing customer relationships pertains more to customer service strategies, financial forecasting relates to predicting future financial outcomes, and human resource planning deals with workforce management. All of these aspects are vital for overall business operations but do not encompass the main focus of inventory management.