CPIM (Basics of Supply Chain Management) 3 — Questions and Answers
Question 1: Which type of supplier relationship involves the highest level of collaboration and information sharing?
- Transactional
- Preferred supplier
- Strategic alliance/partnership (Correct answer)
- Competitive bidding
Correct answer: Strategic alliance/partnership
Strategic alliances involve deep collaboration, shared risk, joint planning, and extensive information sharing between supply chain partners.
Question 2: The primary purpose of a Distribution Requirements Planning (DRP) system is to:
- Optimize warehouse picking routes
- Project inventory replenishment needs across a distribution network (Correct answer)
- Manage carrier contract negotiations
- Track customer returns and reverse logistics
Correct answer: Project inventory replenishment needs across a distribution network
DRP extends MRP logic to distribution networks, projecting future inventory needs at multiple locations to plan timely replenishment.
Question 3: A company implements Vendor-Managed Inventory (VMI). What is the key operational change?
- The customer places orders directly with the supplier's ERP system
- The supplier monitors customer inventory levels and initiates replenishment (Correct answer)
- The customer takes ownership of inventory at the supplier's warehouse
- A third-party logistics provider manages all inventory decisions
Correct answer: The supplier monitors customer inventory levels and initiates replenishment
In VMI, the supplier assumes responsibility for monitoring and replenishing the customer's inventory based on agreed-upon parameters.
Question 4: Which term describes the total time from when a customer places an order to when it is delivered?
- Manufacturing cycle time
- Order-to-delivery lead time (Correct answer)
- Replenishment lead time
- Cash-to-cash cycle time
Correct answer: Order-to-delivery lead time
Order-to-delivery lead time (also called order cycle time) measures the elapsed time from order placement to customer receipt.
Question 5: Cross-docking in a distribution center primarily achieves:
- Lower product damage rates through better storage
- Reduced inventory holding time by transferring goods directly from inbound to outbound (Correct answer)
- Higher accuracy through multiple quality inspection points
- Improved product traceability through RFID scanning
Correct answer: Reduced inventory holding time by transferring goods directly from inbound to outbound
Cross-docking eliminates or minimizes storage time by moving product directly from receiving docks to shipping docks.
Question 6: Which supply chain risk is BEST mitigated by maintaining dual or multiple sourcing strategies?
- Currency exchange rate volatility
- Single-source supplier disruption (Correct answer)
- Demand forecast inaccuracy
- Transportation cost increases
Correct answer: Single-source supplier disruption
Multiple sourcing spreads supply risk so that if one supplier fails, others can continue to provide the needed materials.
Question 7: In the context of supply chain sustainability, the 'triple bottom line' refers to measuring performance across:
- Cost, quality, and delivery
- Economic, environmental, and social dimensions (Correct answer)
- Supplier, manufacturer, and customer tiers
- Short-term, medium-term, and long-term horizons
Correct answer: Economic, environmental, and social dimensions
The triple bottom line framework evaluates organizational performance across economic (profit), environmental (planet), and social (people) dimensions.
CPIM (Basics of Supply Chain Management) 3
Which type of supplier relationship involves the highest level of collaboration and information sharing?