CPP CPP Cost Management & Budgeting 2

Question 1

What is 'SKU rationalization' in packaging cost management?

Accepted Answer

Reducing the number of packaging variants to eliminate complexity and lower costs

Answer

SKU rationalization involves eliminating low-value or redundant packaging stock keeping units to reduce complexity, lower inventory costs, and improve supply chain efficiency.

Question 2

What is the purpose of a 'spend analysis' in packaging procurement?

Accepted Answer

To categorize and analyze all packaging expenditures to identify savings opportunities

Answer

A spend analysis systematically categorizes all packaging expenditures by supplier, category, and geography to identify consolidation opportunities, redundancies, and cost reduction levers.

Question 3

What does 'make vs. buy' analysis determine in a packaging context?

Accepted Answer

Whether to manufacture packaging in-house or purchase it from external suppliers

Answer

Make vs. buy analysis compares the total cost and strategic implications of producing packaging internally versus purchasing it from outside suppliers.

Question 4

What is 'demand forecasting' and why is it important for packaging cost control?

Accepted Answer

Estimating future packaging volume requirements to optimize order quantities and reduce costs

Answer

Demand forecasting estimates future packaging volume needs, enabling optimal order quantities that balance inventory holding costs against purchase price discounts.

Question 5

What is an 'economic order quantity' (EOQ) in packaging inventory management?

Accepted Answer

The optimal order size that minimizes total inventory holding and ordering costs

Answer

EOQ is a formula-derived order quantity that minimizes the sum of inventory holding costs and ordering/setup costs for a packaging component.

(CPP) Certified Packaging Professional Practice Test

(CPP) Certified Packaging Professional Practice Test

CPP CPP Cost Management & Budgeting 2