Certified Supply Chain Professional (CSCP) Practice Exam

What does the term "days supply" indicate about inventory?

1. The efficiency of inventory turnover

2. The duration inventory can sustain operations at current rates

3. The amount of revenue generated from held inventory

4. The average time taken to restock inventory

The correct answer is: The duration inventory can sustain operations at current rates

The term "days supply" refers specifically to the duration that current inventory levels can sustain operations given the existing consumption or sales rates. This metric provides valuable insights into how long the available inventory is expected to last before it needs to be replenished. For example, if a company has a days supply of 30 days, it indicates that, at the current rate of usage, the inventory will last for a full month before running out. This helps businesses manage their inventory levels effectively by anticipating when restocking will be necessary to avoid stockouts or overstock situations. Understanding days supply is crucial for effective inventory management as it enables companies to align their procurement strategies, optimize storage costs, and improve overall supply chain efficiency. The other options focus on different aspects of inventory management, but they do not directly define what days supply quantifies in terms of inventory sustainability.