CPIM Practice Exam

Which term best describes items completely processed and ready for shipping?

1. Decoupling inventory

2. Raw materials

3. Finished goods inventory

4. Work in process

The correct answer is: Finished goods inventory

The term that best describes items that have been completely processed and are ready for shipping is finished goods inventory. This category includes products that have completed all stages of production and are now available for sale to customers or for distribution. Finished goods inventory represents the end of the manufacturing process and indicates that no further processing is required. It is a critical component for businesses, as effective management of finished goods inventory ensures that customer demand can be met efficiently and helps in maintaining optimal stock levels. In contrast, decoupling inventory refers to stock held to buffer against fluctuations in production or demand, rather than being ready for final sale. Raw materials are the basic inputs used in the production process and have not yet been transformed into final products. Work in process represents items that are in a state of production but are not yet completed, which means they cannot be shipped. Thus, finished goods inventory is the appropriate term for items that are fully processed and ready for shipment.