CPM Procurement & JIT Inventory 3

Question 1

A plant using JIT experiences a supplier quality failure that halts the production line. What does this event reveal about the JIT implementation?

Accepted Answer

Supplier qualification and quality assurance processes were inadequate

Answer

JIT's lack of buffer inventory amplifies the impact of supplier quality failures, exposing weaknesses in upstream supplier qualification and quality controls.

Question 2

What is the primary purpose of a supplier scorecard in procurement management?

Accepted Answer

To objectively measure and track supplier performance across key criteria

Answer

Supplier scorecards provide a structured, data-driven method to evaluate and track performance on quality, delivery, cost, and responsiveness over time.

Question 3

In supply chain management, what does 'demand amplification' (the bullwhip effect) result from?

Accepted Answer

Small demand fluctuations that cause increasingly larger order swings upstream

Answer

The bullwhip effect occurs when small consumer demand changes are progressively amplified into larger order variability as they move upstream through the supply chain.

Question 4

Which procurement approach best supports a lean manufacturing environment?

Accepted Answer

Frequent small-lot deliveries synchronized with production schedules

Answer

Lean manufacturing requires frequent, small deliveries timed to production needs to minimize inventory while ensuring continuous supply.

Question 5

A plant negotiates a 2% early payment discount (net 30, 2/10). What is the annualized cost of NOT taking this discount?

Accepted Answer

Approximately 36%

Answer

Using the formula: (2/98) × (360/20) ≈ 36.7%, forgoing a 2/10 net 30 discount carries roughly a 36% annualized cost of capital.

(CPM) Certified Plant Manager Practice Test

(CPM) Certified Plant Manager Practice Test

CPM Procurement & JIT Inventory 3