CLP Supply Chain Management & Planning 4 — Questions and Answers
Question 1: In logistics network design, which factor most significantly influences the number of distribution centers a company should operate?
- Number of SKUs in the product catalog
- Trade-off between transportation costs and inventory/facility costs (Correct answer)
- Color of packaging materials
- Number of employees in the organization
Correct answer: Trade-off between transportation costs and inventory/facility costs
Network design optimizes the trade-off between transportation costs (reduced by more DCs close to customers) and inventory/facility costs (reduced by fewer DCs).
Question 2: What is 'demand sensing' in modern supply chain management?
- Installing motion sensors in warehouses to count inventory
- Using real-time, high-frequency data signals to detect near-term demand shifts (Correct answer)
- Surveying customers monthly about future purchasing intentions
- Training sales staff to sense customer mood during sales calls
Correct answer: Using real-time, high-frequency data signals to detect near-term demand shifts
Demand sensing uses real-time POS, weather, social media, and other signals to detect demand shifts days or weeks before traditional forecasting systems.
Question 3: Which inventory classification system prioritizes management attention by grouping items based on their annual consumption value?
- FIFO/LIFO classification
- ABC analysis (Correct answer)
- XYZ analysis
- VED analysis
Correct answer: ABC analysis
ABC analysis classifies inventory into A (high value), B (medium value), and C (low value) groups based on annual consumption value, focusing management effort accordingly.
Question 4: A retailer's distribution center receives full truckloads from suppliers and immediately transfers product to outbound trucks for store delivery without putting items into storage. This practice is called:
- Drop shipping
- Flow-through distribution
- Cross-docking (Correct answer)
- Milk-run delivery
Correct answer: Cross-docking
Cross-docking transfers inbound shipments directly to outbound vehicles with minimal or no storage time, reducing handling costs and cycle time.
Question 5: In supply chain risk management, 'single-source' suppliers present which primary risk?
- Higher quality due to specialization
- Complete supply disruption if that one supplier fails (Correct answer)
- Lower prices due to volume concentration
- Simpler supplier relationship management
Correct answer: Complete supply disruption if that one supplier fails
Single-source suppliers create concentration risk — if the supplier experiences disruption, the buyer has no alternative source and faces complete supply stoppage.
Question 6: Which supply chain collaboration model involves a manufacturer sharing production planning data with key suppliers so they can align their own capacity and materials planning?
- Collaborative Planning, Forecasting, and Replenishment (CPFR) (Correct answer)
- Just-in-Sequence (JIS) delivery
- Consignment stocking
- Spot market procurement
Correct answer: Collaborative Planning, Forecasting, and Replenishment (CPFR)
CPFR is a structured collaboration framework where trading partners share planning data, forecasts, and replenishment signals to synchronize supply chains.
Question 7: What is the key difference between 'strategic sourcing' and 'tactical purchasing' in supply chain management?
- Strategic sourcing focuses on long-term value and supplier relationships; tactical purchasing addresses immediate, transactional needs (Correct answer)
- Strategic sourcing only applies to raw materials; tactical purchasing covers finished goods
- Tactical purchasing always costs more than strategic sourcing
- Strategic sourcing eliminates the need for purchase orders
Correct answer: Strategic sourcing focuses on long-term value and supplier relationships; tactical purchasing addresses immediate, transactional needs
Strategic sourcing takes a long-term, value-driven approach to supplier selection and relationship development, while tactical purchasing focuses on immediate transaction execution.
CLP Supply Chain Management & Planning 4
In logistics network design, which factor most significantly influences the number of distribution centers a company should operate?