CGM Supply Chain & Vendor Management 3

Question 1

The ABC inventory classification system categorizes items based on:

Accepted Answer

Annual consumption value to prioritize management attention

Answer

Alphabetical order of supplier names

Answer

Physical size and storage requirements

Answer

Date of last purchase order

Question 2

Which clause in a vendor contract specifies the standards a supplier must meet and the remedies available if those standards are not achieved?

Accepted Answer

Service level agreement (SLA)

Answer

Indemnification clause

Answer

Force majeure clause

Answer

Arbitration clause

Question 3

A general manager notices inventory turnover has dropped from 12 to 6 times per year. This most likely indicates:

Accepted Answer

Excess inventory is accumulating, tying up working capital

Answer

The company is selling products twice as fast as before

Answer

The company has improved its cash conversion cycle

Answer

Suppliers are delivering goods more frequently

Question 4

In a vendor risk assessment, which factor represents a supply chain resilience strategy?

Accepted Answer

Dual-sourcing critical components from geographically diverse suppliers

Answer

Selecting the vendor with the lowest quoted price only

Answer

Extending payment terms to 90 days to improve cash flow

Answer

Reducing safety stock levels to lower holding costs

Question 5

Consignment inventory arrangements benefit the buyer primarily by:

Accepted Answer

Delaying payment until goods are sold, reducing the buyer's carrying costs

Answer

Transferring quality control responsibility to the supplier

Answer

Allowing the buyer to return all unsold goods at any time without penalty

Answer

Giving the buyer ownership of the goods immediately upon delivery

Question 6

Which approach to supplier relationship management focuses on sharing information, risks, and rewards to achieve mutual long-term goals?

Accepted Answer

Strategic partnership / collaborative sourcing

Answer

Transactional sourcing

Answer

Spot buying

Answer

Competitive bidding

Question 7

Demand forecasting accuracy is most critical in supply chain planning because:

Accepted Answer

Poor forecasts lead directly to either excess inventory or stockouts, both of which increase costs

Answer

Accurate forecasts eliminate the need for a procurement team

Answer

Forecasts determine the salary budget for warehouse staff

Answer

Government regulations require published demand forecasts