CPIM Practice Exam

In warehouse management, how is inventory accuracy typically audited?

1. Through employee feedback

2. By conducting cycle counting

3. Through customer surveys

4. By analyzing shipping records

The correct answer is: By conducting cycle counting

In warehouse management, inventory accuracy is primarily audited through a process known as cycle counting. This method involves regularly counting a subset of inventory items on a scheduled basis, which helps ensure that the physical count matches what is recorded in the inventory management system. Cycle counting is preferred because it allows for ongoing assessment of inventory accuracy without the need for a full physical inventory shutdown, which can be disruptive to operations. By systematically counting a portion of the inventory, discrepancies can be identified and resolved more frequently, thus maintaining high levels of accuracy in inventory records. Other methods, such as employee feedback, customer surveys, and analyzing shipping records, play roles in overall inventory management but do not serve as direct auditing techniques for inventory accuracy. While employee feedback can provide insights into discrepancies, it lacks the objective measurement of cycle counting. Similarly, customer surveys may indicate issues with stock levels or order fulfillment but do not help directly verify inventory accuracy. Analyzing shipping records can offer some visibility into inventory trends but does not confirm the current status of physical stock. Therefore, cycle counting stands out as the most effective and systematic method for auditing inventory accuracy in a warehouse setting.