CPP Inventory & Supply Chain Management 3

Question 1

What is the primary purpose of safety stock in inventory management?

Accepted Answer

To buffer against demand variability and supply uncertainty

Answer

Safety stock is held as a buffer to prevent stockouts caused by unexpected demand spikes or supplier delivery delays.

Question 2

Which supply chain model uses actual downstream demand data to pull inventory through the supply chain rather than pushing based on forecasts?

Accepted Answer

Pull system

Answer

A pull system (e.g., Kanban) replenishes inventory based on actual consumption signals rather than forecasted demand.

Question 3

A purchasing professional evaluates a supplier's On-Time Delivery (OTD) rate of 72%. What does this indicate?

Accepted Answer

72% of orders were delivered within the agreed timeframe

Answer

OTD rate measures the percentage of orders delivered on or before the promised date, so 72% means 28% were late.

Question 4

In supply chain risk management, 'single sourcing' creates which type of risk?

Accepted Answer

Concentration risk due to dependence on one supplier

Answer

Single sourcing creates concentration risk because supply disruption at one supplier can halt the buyer's entire supply of that item.

Question 5

Which warehousing strategy reduces handling by moving goods directly from inbound receiving to outbound shipping with minimal or no storage?

Accepted Answer

Cross-docking

Answer

Cross-docking transfers inbound shipments directly to outbound vehicles at a distribution point, eliminating storage time.

(CPP) Certified Purchasing Professional Practice Test