CPIM Practice Exam

What is the goal of lot-size inventory?

1. To minimize transportation costs

2. To maximize inventory turnover

3. To capitalize on purchasing economies

4. To simplify inventory classification

The correct answer is: To capitalize on purchasing economies

The goal of lot-size inventory is to capitalize on purchasing economies. When businesses purchase or produce goods in larger quantities, they often benefit from bulk pricing, which reduces the per-unit cost of items. This approach also allows companies to take advantage of discounts offered by suppliers for larger orders, thereby lowering overall procurement costs. By strategically managing lot sizes, companies can optimize their inventory levels and reduce the total cost of ownership. This practice is particularly important in supply chain management, where balancing inventory levels with demand is critical for maintaining operational efficiency and financial performance. While minimizing transportation costs and maximizing inventory turnover are important considerations in inventory management, they are not the primary objectives related to lot-size decisions. Similarly, simplifying inventory classification is a useful practice but does not directly connect to the goals of managing lot sizes effectively.