CPIM Practice Exam

What is the primary purpose of inventory control?

1. To minimize storage costs

2. To maintain desired levels of items

3. To maximize product turnover

4. To improve employee efficiency

The correct answer is: To maintain desired levels of items

The primary purpose of inventory control is to maintain desired levels of items, ensuring that there is an adequate supply of products to meet customer demand without overstocking. Effective inventory control involves monitoring stock levels, managing reorder points, and ensuring that the right amount of inventory is available at the right time. This helps organizations avoid stockouts, which can lead to missed sales, and prevents excess inventory, which can result in increased holding costs and potential obsolescence. Maintaining desired inventory levels is essential for balancing service levels and costs. If inventory levels are too low, the company risks depriving customers of products they need, which could harm the business’s reputation and profitability. Conversely, if inventory levels are too high, it leads to increased storage costs, capital tied up in unsold goods, and the risk of obsolescence. Thus, effective inventory control aims to optimize these levels to ensure operational efficiency and customer satisfaction.