CPIM - Certified in Planning and Inventory Management Distribution Planning Questions and Answers — Questions and Answers
Question 1: Which of the following best describes the core logic of Distribution Requirements Planning (DRP)?
- It determines replenishment needs for downstream locations based on historical shipments from the central warehouse.
- It calculates future requirements for distribution centers by applying MRP principles, starting from the end-customer forecast and working up the supply chain. (Correct answer)
- It allocates available finished goods inventory from the manufacturing plant based on the Master Production Schedule (MPS) capacity.
- It generates an optimal transportation schedule to minimize freight costs between distribution echelons.
Correct answer: It calculates future requirements for distribution centers by applying MRP principles, starting from the end-customer forecast and working up the supply chain.
DRP uses the same time-phased logic as MRP but applies it to the distribution network. It starts with the forecast at the lowest level (e.g., retail store or regional DC) and uses that demand to calculate replenishment needs for the next level up the chain, all the way back to the central warehouse or factory.
Question 2: A medical device company needs to transport a small, high-value, and extremely time-sensitive surgical robot for an emergency procedure at a hospital across the country. Which mode of transportation would be the MOST appropriate choice?
- Less-than-truckload (LTL) road transport
- Rail transport
- Air freight (Correct answer)
- Ocean freight
Correct answer: Air freight
Air freight is the fastest mode of transportation for long distances and is best suited for high-value, time-sensitive shipments where the high cost is justified by the urgency and value of the goods. Road, rail, and ocean transport would be too slow for this type of emergency requirement.
Question 3: A distribution center's primary function is to receive truckloads of pre-packaged, pre-sorted products from multiple suppliers and immediately load them onto outbound trucks for delivery to retail stores, often in less than 24 hours. This practice, which minimizes storage and inventory holding, is best described as:
- Put-away and storage
- Break-bulk operation
- Reverse logistics
- Cross-docking (Correct answer)
Correct answer: Cross-docking
Cross-docking is a logistics procedure where products from a supplier or manufacturing plant are distributed directly to a customer or retail chain with minimal to no handling or storage time. It involves unloading materials from an incoming vehicle and loading them directly into outbound vehicles.
Question 4: A national retailer decides to increase the number of its regional distribution centers (DCs) to move inventory closer to its stores. What is the MOST likely impact of this change on its logistics network?
- Increased total safety stock and increased outbound transportation costs.
- Decreased total safety stock and decreased outbound transportation costs.
- Increased total safety stock and decreased outbound transportation costs. (Correct answer)
- Decreased total safety stock and increased outbound transportation costs.
Correct answer: Increased total safety stock and decreased outbound transportation costs.
Adding more DCs places inventory closer to customers, which reduces outbound transportation costs and improves delivery lead times. However, according to the principle of risk pooling (square root rule), decentralizing inventory across more locations increases the total amount of safety stock required in the system to maintain the same service level.
Question 5: In a well-integrated planning system, the output from Distribution Requirements Planning (DRP) serves as a critical input for which of the following processes?
- The Master Production Schedule (MPS) (Correct answer)
- The strategic business plan
- Supplier relationship management
- The detailed shop floor schedule
Correct answer: The Master Production Schedule (MPS)
The DRP system calculates the time-phased replenishment requirements for finished goods across the entire distribution network. The sum of these requirements, particularly the planned orders at the central warehouse or plant level, represents the total demand that manufacturing must produce. This demand stream is a primary input to the Master Production Schedule (MPS).
Question 6: A distribution center receives large, truckload shipments of a single product from a manufacturing plant. The DC's primary activity is to break these large shipments down into smaller, mixed-product pallets which are then shipped to individual retail stores. This warehousing function is best described as:
- Consolidation
- Postponement
- Break-bulk (Correct answer)
- Assortment mixing
Correct answer: Break-bulk
The break-bulk function involves receiving large-quantity inbound shipments and breaking them down into smaller-quantity outbound shipments. This is the opposite of consolidation, where multiple small shipments are combined into one large one. Assortment mixing is related but more specifically refers to creating a variety of products on an outbound pallet.
CPIM - Certified in Planning and Inventory Management Distribution Planning Questions and Answers
Which of the following best describes the core logic of Distribution Requirements Planning (DRP)?