CPIM Practice Exam

What does the term "stock keeping unit (SKU)" refer to?

1. A promotional item in retail

2. An inventory item identifiable by a unique code

3. A measure of total sales

4. A type of accounting principle

The correct answer is: An inventory item identifiable by a unique code

The term "stock keeping unit (SKU)" refers to an inventory item that is identifiable by a unique code. This code is used to track the item throughout the supply chain and inventory management systems. Each SKU is assigned to a specific product and includes details such as size, color, brand, and other distinguishing characteristics. This unique identification system allows businesses to efficiently manage inventory, streamline order processing, and analyze sales data specific to each product. By using SKUs, retailers can easily monitor stock levels, determine reorder points, and analyze sales trends, which ultimately aids in better inventory control and forecasting. In contrast, the other choices do not accurately describe the concept of an SKU. A promotional item in retail does not encapsulate the broader application of an SKU, which applies to all inventory items, not just those that are on promotion. A measure of total sales pertains to revenue and does not relate to the identification of individual inventory items. Finally, a type of accounting principle does not align with the inventory management context in which SKUs are utilized.