CPT Inventory Management & Supply Chain 2 — Questions and Answers
Question 1: In a 'pull' production system, manufacturing is triggered by:
- Pre-set production schedules
- Supplier delivery schedules
- Management demand forecasts
- Actual customer demand (Correct answer)
Correct answer: Actual customer demand
Pull systems initiate production only when actual customer demand signals a need, reducing overproduction and excess inventory.
Question 2: In a Vendor-Managed Inventory (VMI) arrangement, who is responsible for monitoring and replenishing inventory?
- The warehouse manager
- The customer's procurement team
- The supplier/vendor (Correct answer)
- A third-party logistics provider
Correct answer: The supplier/vendor
VMI delegates the responsibility of monitoring and replenishing a customer's inventory to the supplier, based on agreed service levels.
Question 3: Cycle counting is best described as:
- Counting all inventory items once per fiscal year
- Tracking the number of production cycles completed
- Auditing a small subset of inventory items on a rotating basis (Correct answer)
- Counting defective items at the end of each shift
Correct answer: Auditing a small subset of inventory items on a rotating basis
Cycle counting is a continuous audit method that counts portions of inventory on a rotating schedule, providing more timely accuracy than annual physical inventories.
Question 4: The 'bullwhip effect' in supply chains describes:
- A technique for disciplining underperforming suppliers
- Amplified order variability as demand signals move upstream through the supply chain (Correct answer)
- Rapid acceleration of delivery speeds across the network
- Strict enforcement of inventory accuracy policies
Correct answer: Amplified order variability as demand signals move upstream through the supply chain
The bullwhip effect occurs when small changes in end-customer demand cause increasingly large swings in orders further up the supply chain.
Question 5: Cross-docking in logistics involves:
- Storing products across multiple distribution centers
- Shipping goods across international borders simultaneously
- Checking products at border customs inspections
- Transferring goods from inbound to outbound vehicles with minimal or no storage (Correct answer)
Correct answer: Transferring goods from inbound to outbound vehicles with minimal or no storage
Cross-docking moves products directly from receiving docks to shipping docks, bypassing warehouse storage to speed delivery and reduce handling costs.
Question 6: Kitting in manufacturing refers to:
- Sewing or fastening components together on the production line
- Inspecting finished kits for quality defects
- Pre-assembling sets of components needed for a specific job into one package (Correct answer)
- Shipping multiple customer orders together to reduce freight costs
Correct answer: Pre-assembling sets of components needed for a specific job into one package
Kitting groups all components required for a manufacturing order into a single kit, streamlining assembly and reducing picking errors on the floor.
Question 7: Which term describes the specific inventory level at which a replenishment order must be placed?
- Safety stock level
- Maximum stock level
- Minimum order quantity
- Reorder point (Correct answer)
Correct answer: Reorder point
The reorder point is the specific inventory level that triggers a new purchase order to ensure stock is replenished before a stockout occurs.
CPT Inventory Management & Supply Chain 2
In a 'pull' production system, manufacturing is triggered by: