CPIM Practice Exam

What type of inventory control allows decision making at each stocking location?

1. Centralized inventory control

2. Decentralized inventory control

3. Inventory replenishment

4. Distribution management

The correct answer is: Decentralized inventory control

Decentralized inventory control is indeed the correct choice because it allows for decision making at each stocking location. In a decentralized system, different locations—such as individual warehouses, retail outlets, or distribution centers—have the authority to manage their own inventory levels. This means that each location can respond more quickly to changes in demand, local market conditions, and specific operational needs. Such a system can lead to increased flexibility and responsiveness, as decisions are made closer to the point of sale or customer interaction, tailoring stock management to local requirements. In contrast, centralized inventory control typically consolidates decision-making authority at a single, central location, which can lead to longer response times to changes in demand at specific locations. Inventory replenishment refers to the process of restocking items but does not specifically address the level of decision-making authority at various locations. Distribution management involves overseeing the flow of goods from manufacturers to customers but again does not focus on the level of control exerted at individual stocking points.