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Distribution, Logistics, and Global Supply Chain Flashcards

6 cards from real CPIM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. What is the key principle behind 'vendor-managed inventory' (VMI)?

    Answer: The supplier monitors the customer's inventory levels and takes responsibility for replenishment decisions

    In VMI, the supplier has access to the customer's inventory data and is responsible for maintaining agreed-upon stock levels, reducing the customer's ordering burden and improving replenishment efficiency.

  2. ABC inventory classification is based on:

    Answer: Annual usage value, with A items being the highest-value items

    ABC analysis classifies inventory by annual usage value (unit cost × annual volume), with A items typically representing 20% of SKUs but 80% of value, requiring tighter control.

  3. What is 'total cost of quality' composed of?

    Answer: Prevention costs, appraisal costs, and internal and external failure costs

    Total cost of quality (COQ) includes prevention costs (avoiding defects), appraisal costs (detecting defects), internal failure costs (defects caught inside), and external failure costs (defects reaching customers).

  4. Which global trade concept allows goods to be stored in a bonded facility without paying import duties until they are entered into commerce?

    Answer: Foreign trade zone (FTZ)

    A Foreign Trade Zone (FTZ) is a designated area where goods can be stored, manipulated, or manufactured without formal customs entry, deferring or reducing duty payments.

  5. In supply chain risk management, 'supply chain resilience' refers to:

    Answer: The capacity to prepare for, withstand, and recover from disruptions to supply chain continuity

    Supply chain resilience is the adaptive capability to prepare for unexpected events, respond to disruptions, and recover to the original or a better state of operations.

  6. What does 'order cycle time' measure in distribution?

    Answer: The total elapsed time from when a customer places an order to when it is delivered

    Order cycle time (customer order cycle) spans from order placement to receipt, encompassing order processing, picking, packing, shipping, and delivery time.