APICS Supply Chain & Strategy 3 — Questions and Answers
Question 1: When comparing 'functional products' to 'innovative products,' functional products typically require:
- Responsive supply chains with high buffer stock
- Efficient supply chains focused on low cost (Correct answer)
- Agile supply chains with short lead times
- Flexible supply chains with multiple sourcing options
Correct answer: Efficient supply chains focused on low cost
Functional products with stable, predictable demand are best served by efficient supply chains that minimize cost rather than maximize responsiveness.
Question 2: The primary purpose of a Sales and Operations Planning (S&OP) process is to:
- Generate detailed production schedules for the shop floor
- Align supply and demand plans at an aggregate level across the business (Correct answer)
- Negotiate contracts with key suppliers
- Manage day-to-day inventory replenishment
Correct answer: Align supply and demand plans at an aggregate level across the business
S&OP creates a single, integrated plan that balances demand and supply at an aggregate level, aligning cross-functional teams on business goals.
Question 3: Which supply chain risk mitigation strategy involves maintaining relationships with multiple suppliers for the same component?
- Single sourcing
- Dual/multi-sourcing (Correct answer)
- Nearshoring
- Vertical integration
Correct answer: Dual/multi-sourcing
Dual or multi-sourcing reduces supply disruption risk by spreading procurement across two or more qualified suppliers.
Question 4: In supply chain management, 'total cost of ownership' (TCO) includes:
- Purchase price and freight costs only
- All costs associated with acquiring, using, and disposing of a product or service (Correct answer)
- Supplier invoice price plus import duties
- Manufacturing cost plus overhead allocation
Correct answer: All costs associated with acquiring, using, and disposing of a product or service
TCO captures the full lifecycle cost including acquisition, operation, maintenance, and disposal costs beyond just the purchase price.
Question 5: A 'hub-and-spoke' distribution network is most advantageous when:
- Direct shipment costs are lower than consolidation costs
- Consolidating freight reduces transportation costs for many small shipments (Correct answer)
- Customers require same-day delivery
- Products are hazardous and require special handling
Correct answer: Consolidating freight reduces transportation costs for many small shipments
Hub-and-spoke networks consolidate shipments at central hubs, reducing per-unit transportation costs for networks with many small, dispersed shipments.
Question 6: Which of the following is a key benefit of implementing Vendor Managed Inventory (VMI)?
- Customer retains full control over order quantities
- Supplier manages replenishment, reducing the customer's ordering burden and often improving in-stock rates (Correct answer)
- Eliminates the need for demand forecasting
- Reduces the number of suppliers in the network
Correct answer: Supplier manages replenishment, reducing the customer's ordering burden and often improving in-stock rates
In VMI, the supplier takes responsibility for managing and replenishing inventory at the customer's location, improving service levels while reducing the customer's administrative burden.
Question 7: In supply chain strategy, 'decoupling point' refers to:
- The point where a supplier relationship ends
- The inventory point that separates make-to-stock from make-to-order operations (Correct answer)
- The moment demand forecast is converted to a production schedule
- The boundary between domestic and international logistics
Correct answer: The inventory point that separates make-to-stock from make-to-order operations
The decoupling point (also called the customer order decoupling point) separates the part of the supply chain driven by forecasts from the part driven by actual customer orders.
APICS Supply Chain & Strategy 3
When comparing 'functional products' to 'innovative products,' functional products typically require: