CPIM Practice Exam

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Prepare for the CPIM Exam with our comprehensive quiz. Hone your skills with expertly crafted questions that simulate the exam environment. Get the confidence you need to ace your certification test and propel your career in supply chain management!

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What does the projected available balance (PAB) represent?

An inventory balance projected into the past
The remaining payments due on an account
An aggregate of future cash flow
An inventory balance projected into the future

The correct answer is: An inventory balance projected into the future

The projected available balance (PAB) is a forward-looking measure that reflects the anticipated inventory levels over a specified future period. It is calculated based on current inventory on hand, incoming supply (restock), and outgoing demand (sales or usage), allowing an organization to plan its inventory management effectively. By projecting into the future, the PAB helps businesses assess whether they will have enough inventory to meet customer demand, avoid stockouts, or identify potential overstock situations. This forecast enables proactive decision-making regarding purchasing, production schedules, and resource allocation, ensuring that inventory management aligns with overall supply chain objectives. While projecting with historical data is important for analysis, the essence of PAB is its focus on future inventory positions, which is why it is the most accurate representation of effective inventory management planning.