CPIM Practice Exam

What is the primary reason organizations choose to implement a floating-location system for warehouses?

1. To minimize warehouse management system costs.

2. To increase picking speed.

3. To decrease materials handling costs.

4. To maximize cube utilization.

The correct answer is: To maximize cube utilization.

Organizations implement a floating-location system for warehouses primarily to maximize cube utilization. This approach allows for greater flexibility in storing items by utilizing available space more efficiently. Instead of assigning fixed locations for each item, which can lead to wasted space if items are not stored optimally, a floating-location system enables the organization to adaptively allocate storage locations based on current inventory levels and item movement patterns. This increase in cube utilization is advantageous because it allows warehouses to store more products in the same physical space, which can lead to improved efficiency and potentially lower costs associated with warehousing operations. This system ensures that space is not wasted, and it can also enhance inventory turnover by reducing the time products spend in storage. Other options, while relevant to warehouse operations, do not capture the primary motivation behind floating-location systems as effectively as maximizing cube utilization does. For instance, minimizing warehouse management system costs or decreasing materials handling costs can be outcomes of optimizing the layout and operations, but they are not the central purpose of floating locations. Similarly, while increasing picking speed may occur as a secondary benefit of better space utilization, it is the efficient use of warehouse volume that drives the implementation of this system.