CPIM (Basics of Supply Chain Management) 2 — Questions and Answers
Question 1: Which supply chain strategy is BEST suited for a product with highly unpredictable demand and short life cycles?
- Lean supply chain
- Agile supply chain (Correct answer)
- Efficient supply chain
- Continuous replenishment
Correct answer: Agile supply chain
Agile supply chains are designed to respond quickly to unpredictable demand and market volatility.
Question 2: The 'bullwhip effect' in a supply chain refers to:
- Demand variability that amplifies upstream from retailer to manufacturer (Correct answer)
- A technique for smoothing production schedules
- Rapid inventory depletion during peak seasons
- Fluctuating transportation costs across carriers
Correct answer: Demand variability that amplifies upstream from retailer to manufacturer
The bullwhip effect describes how small demand fluctuations at the retail level become progressively amplified as orders move upstream through the supply chain.
Question 3: Which metric measures the percentage of customer orders fulfilled completely from available stock without backorders or lost sales?
- Inventory turnover
- Fill rate (Correct answer)
- Order cycle time
- Perfect order rate
Correct answer: Fill rate
Fill rate measures the proportion of customer demand satisfied immediately from on-hand inventory.
Question 4: A company that owns and operates its own distribution network rather than outsourcing is using:
- Third-party logistics (3PL)
- Fourth-party logistics (4PL)
- Insourcing/vertical integration (Correct answer)
- Drop shipping
Correct answer: Insourcing/vertical integration
Insourcing or vertical integration means the company retains internal control over logistics functions instead of contracting them out.
Question 5: In supply chain management, 'postponement' refers to:
- Delaying supplier payments to improve cash flow
- Deferring product differentiation to as late as possible in the process (Correct answer)
- Holding safety stock until needed by the customer
- Postponing new product launches during economic downturns
Correct answer: Deferring product differentiation to as late as possible in the process
Postponement delays final product customization until closer to the point of delivery to reduce inventory risk and improve flexibility.
Question 6: Which of the following BEST describes a 'push' supply chain strategy?
- Products are manufactured in response to actual customer orders
- Production is based on forecasted demand and inventory is pushed to distribution points (Correct answer)
- Suppliers deliver directly to retail shelves based on POS data
- Safety stock is eliminated by synchronizing production with real-time demand
Correct answer: Production is based on forecasted demand and inventory is pushed to distribution points
A push strategy drives production and inventory based on demand forecasts rather than actual customer orders.
Question 7: Total supply chain cost includes all of the following EXCEPT:
- Inventory carrying costs
- Transportation and logistics costs
- Customer's internal product usage costs (Correct answer)
- Order processing and information costs
Correct answer: Customer's internal product usage costs
Total supply chain cost encompasses costs incurred within the supply chain itself, not the customer's internal costs of using the product.
CPIM (Basics of Supply Chain Management) 2
Which supply chain strategy is BEST suited for a product with highly unpredictable demand and short life cycles?