CERTIFIED INVENTORY OPTIMIZATION
PROFESSIONAL (CIOP) EXAM QUESTION
AND CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2026 Q&A
INSTANT DOWNLOAD PDF
1. Inventory optimization primarily aims to
A. Eliminate all inventory
B. Increase storage capacity
C. Balance service levels and costs
D. Maximize purchasing volume
Answer: C
Rationale: Inventory optimization seeks the best trade-off between
customer service levels and total inventory-related costs.
2. Which cost is directly proportional to inventory quantity?
A. Ordering cost
B. Carrying cost
C. Stockout cost
D. Setup cost
Answer: B
Rationale: Carrying costs such as storage, insurance, and capital costs
increase as inventory levels rise.
3. Economic Order Quantity (EOQ) minimizes the sum of
A. Purchase and shortage costs
B. Ordering and carrying costs
C. Holding and stockout costs
, D. Transportation and handling costs
Answer: B
Rationale: EOQ is designed to balance ordering and carrying costs at their
combined minimum.
4. Safety stock is primarily used to protect against
A. Price fluctuations
B. Demand and lead time variability
C. Supplier insolvency
D. Excess capacity
Answer: B
Rationale: Safety stock buffers uncertainty in demand and lead times.
5. ABC analysis classifies inventory based on
A. Size and weight
B. Demand variability
C. Annual consumption value
D. Shelf life
Answer: C
Rationale: ABC analysis ranks items by annual usage value (cost ×
volume).
6. A “stockout” occurs when
A. Inventory exceeds capacity
B. Demand is forecasted incorrectly
C. Inventory is unavailable when needed
D. Lead time is reduced
Answer: C
Rationale: A stockout happens when inventory cannot meet demand at
the required time.
7. Which metric measures how often inventory is sold and replaced?
A. Fill rate
B. Inventory turnover
C. Service level
, D. Days of supply
Answer: B
Rationale: Inventory turnover indicates the frequency of inventory
replenishment cycles.
8. Days of inventory on hand is calculated as
A. Inventory ÷ Annual demand
B. Inventory ÷ Daily demand
C. Demand ÷ Inventory
D. Lead time ÷ Inventory
Answer: B
Rationale: It measures how many days current inventory will last based on
daily demand.
9. The bullwhip effect refers to
A. Excess inventory at retail level
B. Demand amplification up the supply chain
C. Supplier price increases
D. Transportation delays
Answer: B
Rationale: Small demand changes at retail can cause larger fluctuations
upstream.
10.Just-In-Time (JIT) inventory focuses on
A. Large safety stocks
B. Frequent, small deliveries
C. Forecast-driven production
D. Bulk purchasing
Answer: B
Rationale: JIT reduces inventory by relying on frequent replenishment
aligned with demand.
11.Reorder point is triggered when inventory reaches
A. EOQ
B. Zero stock
PROFESSIONAL (CIOP) EXAM QUESTION
AND CORRECT ANSWERS (VERIFIED
ANSWERS) PLUS RATIONALES 2026 Q&A
INSTANT DOWNLOAD PDF
1. Inventory optimization primarily aims to
A. Eliminate all inventory
B. Increase storage capacity
C. Balance service levels and costs
D. Maximize purchasing volume
Answer: C
Rationale: Inventory optimization seeks the best trade-off between
customer service levels and total inventory-related costs.
2. Which cost is directly proportional to inventory quantity?
A. Ordering cost
B. Carrying cost
C. Stockout cost
D. Setup cost
Answer: B
Rationale: Carrying costs such as storage, insurance, and capital costs
increase as inventory levels rise.
3. Economic Order Quantity (EOQ) minimizes the sum of
A. Purchase and shortage costs
B. Ordering and carrying costs
C. Holding and stockout costs
, D. Transportation and handling costs
Answer: B
Rationale: EOQ is designed to balance ordering and carrying costs at their
combined minimum.
4. Safety stock is primarily used to protect against
A. Price fluctuations
B. Demand and lead time variability
C. Supplier insolvency
D. Excess capacity
Answer: B
Rationale: Safety stock buffers uncertainty in demand and lead times.
5. ABC analysis classifies inventory based on
A. Size and weight
B. Demand variability
C. Annual consumption value
D. Shelf life
Answer: C
Rationale: ABC analysis ranks items by annual usage value (cost ×
volume).
6. A “stockout” occurs when
A. Inventory exceeds capacity
B. Demand is forecasted incorrectly
C. Inventory is unavailable when needed
D. Lead time is reduced
Answer: C
Rationale: A stockout happens when inventory cannot meet demand at
the required time.
7. Which metric measures how often inventory is sold and replaced?
A. Fill rate
B. Inventory turnover
C. Service level
, D. Days of supply
Answer: B
Rationale: Inventory turnover indicates the frequency of inventory
replenishment cycles.
8. Days of inventory on hand is calculated as
A. Inventory ÷ Annual demand
B. Inventory ÷ Daily demand
C. Demand ÷ Inventory
D. Lead time ÷ Inventory
Answer: B
Rationale: It measures how many days current inventory will last based on
daily demand.
9. The bullwhip effect refers to
A. Excess inventory at retail level
B. Demand amplification up the supply chain
C. Supplier price increases
D. Transportation delays
Answer: B
Rationale: Small demand changes at retail can cause larger fluctuations
upstream.
10.Just-In-Time (JIT) inventory focuses on
A. Large safety stocks
B. Frequent, small deliveries
C. Forecast-driven production
D. Bulk purchasing
Answer: B
Rationale: JIT reduces inventory by relying on frequent replenishment
aligned with demand.
11.Reorder point is triggered when inventory reaches
A. EOQ
B. Zero stock
