CIPS Exam L4M7 Topic 3 Question 36 Discussion

Actual exam question for CIPS's L4M7 exam

Question #: 36
Topic #: 3

Company XYZ is a candy manufacturer. Company XYZ makes a batch of 1,000 Christmas candy canes that are no longer edible after December 31. Company XYZ is able to sell 750 canes of the batch, but the other 250 are sitting in the warehouse. December 31 comes, and these candy canes is no longer sell-able. The batch of 250 candy canes belongs to which type of inventory?

AObsolete inventory

BBuffer stock

CRedundant inventory

DStockout

Show Suggested Answer

Suggested Answer: A

Obsolescent stock is stock, usually finished goods, which is in good condition and satisfactory working but for which demand is irreversibly falling towards zero. Once this demand reaches zero the stock can be considered 'obsolete'. It cannot be used or sold in its current state. Food ingredients (like candy canes) which are out of date are another example.

LO 2, AC 2.1

by Yuki at May 30, 2024, 12:20 PM

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Anthony

6 months ago

Haha, yeah, it's like the candy company was trying to be a little too sweet with their holiday stock. Looks like they ended up with a serious case of the Christmas candy blues.

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Nikita

5 months ago

C) Redundant inventory

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Burma

5 months ago

B) Buffer stock

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Cristina

6 months ago

A) Obsolete inventory

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Mary

6 months ago

I agree with France. Since they are no longer sell-able after December 31, they are considered obsolete.

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Carlton

6 months ago

Hmm, I'm not so sure. Couldn't this also be considered redundant inventory? I mean, they couldn't sell all 1,000 canes, so the extra 250 were just sitting around going stale.

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Rana

5 months ago

D) Stockout

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Lemuel

6 months ago

C) Redundant inventory

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Niesha

6 months ago

B) Buffer stock

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Zack

6 months ago

A) Obsolete inventory

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France

6 months ago

I think the batch of 250 candy canes belongs to obsolete inventory.

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Vincenza

6 months ago

I agree with Mabel. Obsolete inventory is the right term for these unsold candy canes. I mean, who would want to buy Christmas candy in January? That's just asking for a cavity.

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