CPIM Practice Exam

Which term refers to the physical quantity of stock in inventory records?

1. On-hand balance

2. Available inventory

3. Allocated inventory

4. Reserved stock

The correct answer is: On-hand balance

The term that refers to the physical quantity of stock in inventory records is "on-hand balance." This term specifically indicates the actual amount of inventory available at a specific location at any given time. It includes all items that are physically present in the warehouse or inventory storage areas, reflecting what can be used or sold without considering any outstanding orders or allocations. This distinction is important in inventory management, as the on-hand balance provides a clear picture of current stock levels, allowing businesses to make informed decisions about reordering, production, and sales planning. The accuracy of on-hand balances is crucial for effective inventory control and helps prevent stockouts or overstock situations. Other terms, while related to inventory management, do not convey the same meaning as on-hand balance. For example, available inventory might refer to stock that is not committed to any outstanding orders, while allocated inventory represents the portion of inventory that has been assigned to specific customers or orders but is not yet shipped. Reserved stock typically means inventory set aside for a specific purpose or customer and is not available for general use or sale.