CPIM Practice Exam

What is the primary advantage of cycle counting in inventory management?

1. Accurate forecasting of future inventory needs

2. Timely detection and correction of errors

3. Reduction of total production time

4. Improved supplier relationships

The correct answer is: Timely detection and correction of errors

Cycle counting is a vital process in inventory management, primarily because it allows for the timely detection and correction of discrepancies in inventory records. This ongoing verification process helps maintain accurate inventory levels, which is crucial for effective operations and decision-making. By conducting regular counts of a portion of the inventory throughout the year, businesses can identify errors, whether due to counting mistakes, theft, spoilage, or misplaced items, as they arise rather than at the end of a counting period. This proactive approach to inventory management ensures that issues are addressed swiftly, helping to maintain the accuracy of inventory records. Accurate records enable better planning, purchasing, and production scheduling, all of which contribute to overall operational efficiency. While forecasting future inventory needs, reducing total production time, and improving supplier relationships are also important aspects of supply chain management, they are not the primary advantages of cycle counting. The focus of cycle counting is mainly on ensuring the integrity of inventory data, which directly supports timely error correction and overall accuracy in inventory management.