CPIM Practice Exam

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Prepare for the CPIM Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

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What will happen to average annual inventory levels if a large seasonal order is produced in combination with regular orders?

They will remain the same.
They will decrease significantly.
They will increase.
They will fluctuate based on the season.

The correct answer is: They will increase.

When a large seasonal order is produced alongside regular orders, average annual inventory levels are likely to increase due to the added volume of product being produced and held in stock. Seasonal orders typically require businesses to stock up in anticipation of higher demand during specific times of the year, which means that production schedules are adjusted to accommodate this additional inventory. As a result, the total inventory on hand will rise, reflecting not only the regular orders but also the extra stock created for the seasonal demand. This increase in inventory levels can help ensure that the business is prepared to meet fluctuations in customer demand, leading to enhanced service levels and reduced risk of stockouts during peak periods. Maintaining this higher inventory level during the season will result in elevated average annual inventory figures as well.