CPIM Practice Exam

What does pipeline stock refer to in inventory management?

1. Inventory held at the production facility

2. Inventory in the transportation network and distribution system

3. Inventory stored in retail locations

4. Inventory that is directly sold to customers

The correct answer is: Inventory in the transportation network and distribution system

Pipeline stock in inventory management refers to the inventory that is in transit within the transportation network and distribution system, moving from suppliers to manufacturers or from manufacturers to distribution centers. This type of stock includes all goods that have been ordered but have not yet been received at their final destination. Understanding pipeline stock is crucial because it impacts lead times, inventory levels, and overall supply chain performance. By managing pipeline stock effectively, organizations can better forecast demand and streamline their inventory processes. In contrast, inventory held at production facilities is considered work-in-process, inventory stored at retail locations is classified as finished goods or merchandise inventory, and inventory directly sold to customers is not held as inventory within the supply chain but rather as sales. Thus, pipeline stock specifically addresses the movement of inventory through the supply chain rather than what is held in storage or sold directly.