Certified Supply Chain Professional (CSCP) Practice Exam

What is considered in-transit inventory?

1. Goods that are in production

2. Finished products sold to customers

3. Inventory being transported in the supply chain

4. Raw materials stored at the supplier's facility

The correct answer is: Inventory being transported in the supply chain

In-transit inventory refers to the stock that is currently being transported within the supply chain from one location to another. This includes products that are on their way to a distribution center, retail store, or directly to the customer, which means they are not available for immediate sales or use at either the origin or destination point. Considering the options, goods in production, finished products sold to customers, and raw materials stored at the supplier's facility do not fit the definition of in-transit inventory. Goods in production are still being manufactured, and therefore are not yet complete or shipped. Finished products sold to customers have already reached their final destination and are accounted for as sold inventory, rather than inventory in transit. Raw materials stored at the supplier's facility consist of stock that is not moving, hence they cannot be classified as in-transit inventory. In-transit inventory plays a crucial role in supply chain management as it affects inventory levels, order fulfillment times, and overall operational efficiency. Understanding this concept helps businesses optimize their logistics and improve service levels.