CPIM Distribution Planning 4 — Questions and Answers
Question 1: The Distribution Requirements Planning (DRP) system extends MRP logic to distribution by:
- Calculating raw material needs at the plant level
- Planning time-phased replenishment orders across the distribution network (Correct answer)
- Optimizing truck routing and scheduling
- Calculating safety stock for all SKUs simultaneously
Correct answer: Planning time-phased replenishment orders across the distribution network
DRP applies MRP time-phasing logic to distribution, netting demand against on-hand inventory and planned receipts to generate replenishment orders.
Question 2: A company decides to implement vendor-managed inventory (VMI). Who takes responsibility for maintaining stock levels at the customer's location?
- The customer's procurement team
- The supplier or vendor (Correct answer)
- A third-party auditor
- The distribution center manager
Correct answer: The supplier or vendor
In VMI, the supplier monitors the customer's inventory levels and takes responsibility for replenishment decisions within agreed parameters.
Question 3: Which of the following best describes 'postponement' as a distribution strategy?
- Delaying shipment until customer demand is confirmed
- Delaying final product configuration or customization until closer to the point of demand (Correct answer)
- Holding safety stock at distribution centers instead of plants
- Postponing capital investment in distribution infrastructure
Correct answer: Delaying final product configuration or customization until closer to the point of demand
Postponement delays differentiation activities (labeling, assembly, customization) until actual demand is known, reducing finished goods inventory risk.
Question 4: Collaborative Planning, Forecasting and Replenishment (CPFR) is designed to:
- Replace ERP systems with cloud-based planning tools
- Align trading partners through shared data and joint forecasting to improve supply chain performance (Correct answer)
- Automate purchase order generation between buyer and seller
- Reduce the number of SKUs in a distribution network
Correct answer: Align trading partners through shared data and joint forecasting to improve supply chain performance
CPFR is a collaborative business model where trading partners share forecasts, plans, and data to improve forecast accuracy and reduce stockouts.
Question 5: In distribution planning, 'dead stock' refers to:
- Inventory that has been damaged in transit
- Slow-moving or obsolete inventory with no recent customer demand (Correct answer)
- Products held at a DC awaiting quality inspection
- Inventory reserved for a specific customer order
Correct answer: Slow-moving or obsolete inventory with no recent customer demand
Dead stock is inventory that has not sold or moved within a defined period and may represent excess, obsolete, or discontinued items.
Question 6: Which transportation mode offers the lowest cost per ton-mile for large volume, non-urgent domestic shipments?
- Air freight
- Truckload (TL)
- Rail (Correct answer)
- Parcel carrier
Correct answer: Rail
Rail offers the lowest cost per ton-mile for high-volume, non-time-sensitive shipments, especially for bulk commodities over long distances.
Question 7: The 'last mile' in distribution refers to:
- The final quality check before shipment leaves the DC
- The last segment of delivery from a local distribution point to the end customer (Correct answer)
- The final mile of highway before a distribution center
- A carrier's service guarantee for on-time delivery
Correct answer: The last segment of delivery from a local distribution point to the end customer
Last-mile delivery is the final leg of the supply chain — from a local hub or DC to the end customer — and is often the most expensive and complex segment.
CPIM Distribution Planning 4
The Distribution Requirements Planning (DRP) system extends MRP logic to distribution by: