Certified Inventory Optimization Professional (CIOP)
Practice Exam Verified Questions, Correct Answers, and
Detailed Explanations for Students||Already Graded A+
1. Which of the following best describes inventory optimization?
A. Reducing inventory to the lowest possible level
B. Balancing inventory investment with service level requirements
C. Eliminating stockouts completely
D. Forecasting demand accurately
Answer: B
Optimization seeks a balance between cost and service, not
minimization or elimination.
2. Safety stock primarily protects against:
A. Lower lead times
B. Poor supplier relationships
C. Demand and supply variability
D. Higher ordering costs
Answer: C
Safety stock cushions against uncertainties in both supply and
demand.
3. Which inventory classification method focuses on monetary
usage value?
A. VED
B. SDE
C. ABC
D. FSN
Answer: C
ABC classifies inventory based on annual consumption value.
,4. The primary purpose of cycle counting is:
A. To eliminate physical inventory counts
B. To improve inventory accuracy continuously
C. To increase safety stock
D. To minimize ordering costs
Answer: B
Cycle counting is continuous accuracy improvement.
5. The Economic Order Quantity (EOQ) model assumes:
A. Variable demand
B. Unlimited storage capacity
C. Constant demand and lead time
D. Increasing holding costs
Answer: C
EOQ is based on stable demand and lead time.
6. A high service level typically results in:
A. Lower inventory
B. Higher safety stock
C. Lower carrying costs
D. Less forecasting accuracy needed
Answer: B
High service levels require more buffer stock.
7. Which KPI measures how frequently inventory is sold and
replaced?
A. Fill rate
B. Inventory turnover
, C. Carrying cost ratio
D. Lead-time variance
Answer: B
Turnover shows inventory movement speed.
8. What is the main benefit of multi-echelon inventory
optimization?
A. Higher local inventory levels
B. Lower transportation costs
C. Optimized inventory across the entire network
D. Increased forecast error
Answer: C
Multi-echelon considers total network optimization.
9. In a continuous review system, an order is placed when:
A. Inventory is zero
B. Reorder point is reached
C. Safety stock is consumed
D. A scheduled cycle occurs
Answer: B
Reaching the ROP triggers replenishment.
10. Forecast error is measured by:
A. EOQ
B. Fill rate
C. MAD or MAPE
D. Lead-time demand
Answer: C
Practice Exam Verified Questions, Correct Answers, and
Detailed Explanations for Students||Already Graded A+
1. Which of the following best describes inventory optimization?
A. Reducing inventory to the lowest possible level
B. Balancing inventory investment with service level requirements
C. Eliminating stockouts completely
D. Forecasting demand accurately
Answer: B
Optimization seeks a balance between cost and service, not
minimization or elimination.
2. Safety stock primarily protects against:
A. Lower lead times
B. Poor supplier relationships
C. Demand and supply variability
D. Higher ordering costs
Answer: C
Safety stock cushions against uncertainties in both supply and
demand.
3. Which inventory classification method focuses on monetary
usage value?
A. VED
B. SDE
C. ABC
D. FSN
Answer: C
ABC classifies inventory based on annual consumption value.
,4. The primary purpose of cycle counting is:
A. To eliminate physical inventory counts
B. To improve inventory accuracy continuously
C. To increase safety stock
D. To minimize ordering costs
Answer: B
Cycle counting is continuous accuracy improvement.
5. The Economic Order Quantity (EOQ) model assumes:
A. Variable demand
B. Unlimited storage capacity
C. Constant demand and lead time
D. Increasing holding costs
Answer: C
EOQ is based on stable demand and lead time.
6. A high service level typically results in:
A. Lower inventory
B. Higher safety stock
C. Lower carrying costs
D. Less forecasting accuracy needed
Answer: B
High service levels require more buffer stock.
7. Which KPI measures how frequently inventory is sold and
replaced?
A. Fill rate
B. Inventory turnover
, C. Carrying cost ratio
D. Lead-time variance
Answer: B
Turnover shows inventory movement speed.
8. What is the main benefit of multi-echelon inventory
optimization?
A. Higher local inventory levels
B. Lower transportation costs
C. Optimized inventory across the entire network
D. Increased forecast error
Answer: C
Multi-echelon considers total network optimization.
9. In a continuous review system, an order is placed when:
A. Inventory is zero
B. Reorder point is reached
C. Safety stock is consumed
D. A scheduled cycle occurs
Answer: B
Reaching the ROP triggers replenishment.
10. Forecast error is measured by:
A. EOQ
B. Fill rate
C. MAD or MAPE
D. Lead-time demand
Answer: C
