CPIM Supply Chain Strategy 3

Question 1

Vertical integration in a supply chain strategy means a company:

Accepted Answer

Owns multiple stages of the supply chain internally

Answer

Vertical integration means a company controls multiple supply chain stages—from raw material to distribution—within its own organizational boundaries.

Question 2

The bullwhip effect in supply chains is primarily caused by:

Accepted Answer

Demand signal distortion amplifying upstream order variability

Answer

The bullwhip effect occurs when small demand fluctuations at the retail level get amplified into large order swings as information moves upstream.

Question 3

Which supply chain strategy aligns best with 'innovative' products characterized by high demand uncertainty?

Accepted Answer

Responsive supply chain emphasizing flexibility and speed

Answer

Fisher's framework recommends a responsive supply chain for innovative products because flexibility to match unpredictable demand is more valuable than cost efficiency.

Question 4

Total cost of ownership (TCO) analysis in supplier selection differs from price-only analysis because it:

Accepted Answer

Includes all costs associated with acquiring and using the product over its life

Answer

TCO captures all direct and indirect costs—purchase price, freight, quality defect costs, service costs—providing a more complete supplier comparison.

Question 5

A company with a make-to-stock strategy should primarily use which demand signal to drive production planning?

Accepted Answer

Statistical demand forecasts

Answer

Make-to-stock production is driven by forecasts because goods are produced in anticipation of demand before orders are received.

(CPIM) Certified in Planning and Inventory Management Practice Test

(CPIM) Certified in Planning and Inventory Management Practice Test

CPIM Supply Chain Strategy 3