Certified Supply Chain Professional (CSCP) Practice Exam

What two decisions does inventory control typically determine?

1. Supplier negotiation strategies and shipment schedules

2. How much to order and when to order

3. Employee needs and productivity levels

4. Sales forecasting and customer preferences

The correct answer is: How much to order and when to order

Inventory control plays a pivotal role in managing a company's stock in order to meet customer demand while minimizing costs. The aspect of inventory control that is most significant involves determining how much to order and when to order these items. Understanding how much to order is crucial because it helps ensure that the right quantity of goods is available to meet customer demand without causing overstock situations that tie up cash and storage space. Conversely, the timing of orders, or when to order, is equally important. It helps optimize inventory levels and reduces the risk of stockouts or excess inventory, which can lead to additional carrying costs. The decisions on how much and when to order are driven by various factors such as demand forecasts, lead times from suppliers, and the costs associated with holding inventory. Effectively balancing these decisions allows a business to maintain efficient operations, meet customer expectations, and enhance overall supply chain performance.