CPIM Practice Exam

What is the definition of inventory buffer?

1. Inventory to meet expected sales demand

2. Stock used to manage operational disruptions

3. Products that are outdated or defective

4. Excess stock held for long-term investment

The correct answer is: Stock used to manage operational disruptions

Inventory buffer refers to stock specifically allocated to manage operational disruptions, ensuring that production or service delivery can continue smoothly even in the face of unforeseen events. This type of inventory is crucial for maintaining continuity in operations when there are fluctuations in supply or unexpected increases in demand. By having an inventory buffer, organizations can mitigate the risks associated with shortages or delays, thus enhancing their ability to meet customer expectations consistently. In contrast, inventory set aside to meet expected sales demand is a different consideration focused on regular sales patterns rather than disruptions. Outdated or defective products do not serve the purpose of an inventory buffer, as they can hinder operational efficiency instead of supporting it. Lastly, excess stock that is retained for long-term investment may not contribute directly to managing operational disruptions, as it is tied more to financial strategies than to immediate operational needs.