CPIM Practice Exam

In which inventory model is an order placed every n time units?

1. Fixed reorder cycle inventory model

2. Periodic restocking model

3. Just-in-time inventory model

4. Consignment inventory model

The correct answer is: Fixed reorder cycle inventory model

The inventory model that involves placing an order every n time units is known as the fixed reorder cycle inventory model. This model operates on a predetermined schedule, allowing businesses to plan their inventory replenishment at regular intervals. By placing orders at consistent time intervals, organizations can maintain a smooth flow of goods and optimize their stock levels. In this model, the quantity to order may vary depending on the inventory level at the time of each order, but the timing of when the order is placed is consistent and predictable. This method is beneficial for managing inventory levels efficiently while minimizing stockouts and excess inventory. The periodic restocking model, while similar, implies that inventory is replenished at specific intervals without a consistent order size determined beforehand. Just-in-time inventory focuses on minimizing inventory levels by ordering only as needed, which does not align with placing orders at fixed time intervals. Consignment inventory involves a supplier maintaining ownership of goods until they are used or sold, which does not pertain to the timing of order placements.