Inventory Management and Fulfillment Operations
Domain 6: Inventory Management and Fulfillment Operations
This domain tests flow: from supplier to inbound shipment to sellable inventory, and the controls that prevent stockouts and excess.
Fulfillment models
FBA: seller ships to a fulfillment center; the marketplace stores, picks, packs, and ships. FBM: seller stores and ships. Hybrid uses both. FBA inbound requires compliant labeling, polybagging, and shipment plans; inventory is received and may be "receiving" before "available." FBM requires handling-time accuracy and carrier performance.
Inventory controls
Key levers are reorder point, safety stock, lead time, sell-through, weeks of cover, and restock limits. Aged inventory incurs long-term storage surcharges; removal or liquidation orders reduce exposure.
Worked example
Daily sales = 20 units; supplier lead time = 30 days; safety stock = 10 days. Reorder point = (20 × 30) + (20 × 10) = 800 units. If on-hand is 700 and 200 are inbound but not received, available is 700; the seller should expedite because available is below the reorder point.
Traps
Counting inbound as available; ignoring lead-time variability; using average sales during a promotion; and forgetting that removal orders take time and incur fees.