CPIM Part 1 Section K
Inventory control - answer The activities and techniques of maintaining the desired
levels of items, whether raw materials, work in process, or finished products.
traceability - answer1) The attribute allowing the ongoing location of a shipment to be
determined.
2) The registering and tracking of parts, processes, and materials used in production, by
lot or serial number.
lot control - answer A set of procedures (e.g. assigning unique batch numbers and
tracking each batch) used to maintain lot integrity from raw materials from the supplier
through manufacturing to consumers.
ABC classification - answer The classification of a group of items in decreasing order of
annual dollar volume (price multiplied by projected volume) or other criteria. This array
is then split into three classes, called A, B, and C. The A group usually represents 10
percent to 20 percent by number of items and 50 percent to 70 percent by projected
dollar volume. The next grouping, B, usually represents about 20 percent of the items
and about 20 percent of the dollar volume. The C class contains 60 percent to 70
percent of the items and represents about 10 percent to 30 percent of the dollar volume.
The ABC principle states that effort and money can be saved through applying looser
controls to the low-dollar-volume class items than will be applied to high-dollar-volume
class items.
Pareto's law - answerA concept developed by Vilfredo Pareto, an Italian economist, that
states that a small percentage of a group accounts for the largest fraction of the impact,
value, and so on. In an ABC classification, for example, 20 percent of the inventory
items may constitute 80 percent of the inventory value.
lot-for-lot (L4L) - answerA lot-sizing technique that generates planned orders in
quantities equal to the net requirements in each period.
point of sale (POS) - answerthe relief of inventory and computation of sales data at the
time and place of sale, generally through the use of bar coding or magnetic media and
equipment.
fixed order quantity - answerA lot-sizing technique in MRP or inventory management
that will always cause planned or actual orders to be generated for a predetermined
fixed quantity, or multiples thereof, if net requirements for the period exceed the fixed
order quantity.
Inventory control - answer The activities and techniques of maintaining the desired
levels of items, whether raw materials, work in process, or finished products.
traceability - answer1) The attribute allowing the ongoing location of a shipment to be
determined.
2) The registering and tracking of parts, processes, and materials used in production, by
lot or serial number.
lot control - answer A set of procedures (e.g. assigning unique batch numbers and
tracking each batch) used to maintain lot integrity from raw materials from the supplier
through manufacturing to consumers.
ABC classification - answer The classification of a group of items in decreasing order of
annual dollar volume (price multiplied by projected volume) or other criteria. This array
is then split into three classes, called A, B, and C. The A group usually represents 10
percent to 20 percent by number of items and 50 percent to 70 percent by projected
dollar volume. The next grouping, B, usually represents about 20 percent of the items
and about 20 percent of the dollar volume. The C class contains 60 percent to 70
percent of the items and represents about 10 percent to 30 percent of the dollar volume.
The ABC principle states that effort and money can be saved through applying looser
controls to the low-dollar-volume class items than will be applied to high-dollar-volume
class items.
Pareto's law - answerA concept developed by Vilfredo Pareto, an Italian economist, that
states that a small percentage of a group accounts for the largest fraction of the impact,
value, and so on. In an ABC classification, for example, 20 percent of the inventory
items may constitute 80 percent of the inventory value.
lot-for-lot (L4L) - answerA lot-sizing technique that generates planned orders in
quantities equal to the net requirements in each period.
point of sale (POS) - answerthe relief of inventory and computation of sales data at the
time and place of sale, generally through the use of bar coding or magnetic media and
equipment.
fixed order quantity - answerA lot-sizing technique in MRP or inventory management
that will always cause planned or actual orders to be generated for a predetermined
fixed quantity, or multiples thereof, if net requirements for the period exceed the fixed
order quantity.
