CPIM Practice Exam

Why might an organization engage in cycle counting?

1. To limit the inventory storage space used

2. To ensure accurate records of inventory continuously

3. To track production costs more accurately

4. To prepare for an annual audit

The correct answer is: To ensure accurate records of inventory continuously

Engaging in cycle counting is primarily aimed at ensuring accurate records of inventory continuously. This practice involves regularly counting a subset of inventory items on a rotating schedule rather than conducting a full inventory count at one time. As a result, organizations can identify discrepancies between physical counts and recorded quantities in their inventory management systems promptly. Maintaining accurate inventory records is essential for effective inventory management, as it helps improve inventory accuracy, minimizes stockouts or overstock situations, and enhances overall supply chain efficiency. By routinely verifying inventory levels through cycle counting, businesses can make informed decisions regarding purchasing, production, and sales strategies based on reliable data. This practice ultimately supports inventory control, operational efficiency, and effective resource allocation. It is a vital process for organizations striving to maintain a healthy inventory system, which is essential for meeting customer demands and maximizing profitability.