Certified Supply Chain Professional (CSCP) Practice Exam

Which inventory management strategy aims to achieve discounts through bulk purchasing?

1. Cycle stock

2. Safety stock

3. Lot-size inventory

4. Buffer inventory

The correct answer is: Lot-size inventory

The inventory management strategy that aims to achieve discounts through bulk purchasing is lot-size inventory. This approach is primarily focused on determining the appropriate quantity to order to take advantage of economies of scale. By purchasing in larger quantities, a company can often negotiate lower per-unit prices, which can significantly reduce overall costs. Lot-size inventory considers various factors, such as order costs, holding costs, and the demand for products, to determine the most cost-effective purchase quantity. It is particularly beneficial for items that have consistent demand and can be stored without risk of obsolescence or excess inventory. Cycle stock refers to the portion of inventory that is ordered in regular intervals to meet customer demand, while safety stock acts as a buffer against uncertainties in supply and demand. Buffer inventory is similar to safety stock in that both serve to stabilize the supply chain against fluctuations, but they are not specifically aimed at taking advantage of purchasing discounts.