CMS Supply Chain Management & Logistics 2 — Questions and Answers
Question 1: Which supply chain strategy is BEST suited for products with highly unpredictable demand and short life cycles?
- Lean supply chain
- Agile supply chain (Correct answer)
- Efficient supply chain
- Risk-hedging supply chain
Correct answer: Agile supply chain
An agile supply chain prioritizes responsiveness and flexibility, making it ideal for volatile demand and short product life cycles.
Question 2: In logistics, what does the term 'cross-docking' refer to?
- Storing goods in multiple warehouses simultaneously
- Transferring inbound shipments directly to outbound transport with minimal storage (Correct answer)
- Sorting products by dock number before shipping
- Crossing international borders with consolidated freight
Correct answer: Transferring inbound shipments directly to outbound transport with minimal storage
Cross-docking moves goods from inbound to outbound transportation with little to no storage time, reducing warehousing costs.
Question 3: A manufacturer uses a Vendor-Managed Inventory (VMI) program. Who is responsible for monitoring stock levels and triggering replenishment?
- The retailer or buyer
- A third-party logistics provider
- The supplier or vendor (Correct answer)
- The warehouse manager
Correct answer: The supplier or vendor
In VMI, the supplier monitors the customer's inventory levels and takes responsibility for initiating replenishment orders.
Question 4: What is the primary purpose of a safety stock in supply chain management?
- To reduce order quantities and save on purchasing costs
- To buffer against demand variability and supply uncertainty (Correct answer)
- To eliminate the need for demand forecasting
- To increase warehouse utilization rates
Correct answer: To buffer against demand variability and supply uncertainty
Safety stock acts as a buffer inventory held to protect against stockouts caused by unpredictable demand spikes or supply delays.
Question 5: Which logistics term describes the consolidation of shipments from multiple suppliers into one truckload destined for a single customer?
- Milk run (Correct answer)
- Drop shipping
- Pool distribution
- Merge-in-transit
Correct answer: Milk run
A milk run is a logistics strategy where a single truck picks up shipments from multiple suppliers along a route and delivers them to one destination.
Question 6: In supply chain risk management, 'supply chain visibility' primarily helps organizations to:
- Reduce the number of suppliers in the network
- Detect and respond to disruptions more quickly (Correct answer)
- Eliminate the need for safety stock
- Increase product variety across the network
Correct answer: Detect and respond to disruptions more quickly
Supply chain visibility provides real-time data on inventory, shipments, and supplier status, enabling faster detection and response to disruptions.
Question 7: A company shifts from a push-based to a pull-based supply chain. What is the key trigger for production in a pull system?
- Sales forecasts for the next quarter
- Actual customer demand or orders (Correct answer)
- Supplier lead times and capacity
- Safety stock reorder points
Correct answer: Actual customer demand or orders
In a pull-based system, production is initiated by actual customer demand rather than forecasts, reducing overproduction and excess inventory.
CMS Supply Chain Management & Logistics 2
Which supply chain strategy is BEST suited for products with highly unpredictable demand and short life cycles?