Procurement & JIT Inventory Flashcards
7 cards from real CPM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Procurement & JIT Inventory flashcards as text
Which of the following is a key advantage of using a sole-source supplier for a critical component?
Answer: Enables deep collaboration, customization, and process integration
Sole-source relationships enable deep technical collaboration, process integration, and co-development that multiple-supplier models cannot easily achieve.
A plant manager reviews inventory turns for raw materials. Which formula correctly calculates inventory turns?
Answer: Annual COGS / Average inventory value
Inventory turns = Annual COGS ÷ Average inventory value; higher turns indicate more efficient use of working capital.
What is 'point-of-use' storage in a JIT manufacturing environment?
Answer: Storing materials and components directly at the workstation where they are consumed
Point-of-use storage places materials directly at the workstation where they are needed, eliminating transport time and reducing work-in-process inventory.
Under the EOQ (Economic Order Quantity) model, if annual demand doubles while holding cost and ordering cost remain constant, the EOQ will:
Answer: Increase by approximately 41%
EOQ = √(2DS/H); doubling D multiplies the EOQ by √2 ≈ 1.414, an increase of approximately 41%.
Which risk mitigation strategy involves qualifying a second supplier for a critical component without actively using them?
Answer: Approved vendor list with backup qualification
Maintaining a qualified backup on an approved vendor list provides supply continuity capability without splitting volume, preserving primary supplier pricing leverage.
A plant switches from quarterly to weekly supplier deliveries for a key component. Which inventory metric will most likely improve?
Answer: Average inventory level
More frequent deliveries reduce the cycle stock component of average inventory, directly lowering average inventory levels and associated holding costs.
In procurement, what is 'specification creep' and why is it a concern?
Answer: Progressive addition of requirements to a purchase specification that increases cost and complexity
Specification creep occurs when stakeholders incrementally add requirements, inflating costs, limiting the supplier pool, and extending lead times without proportional value.