CRA Retail Supply Chain & Replenishment 2 — Questions and Answers
Question 1: A retailer uses a vendor-managed inventory (VMI) model. Which party is primarily responsible for determining replenishment quantities under this arrangement?
- The retailer's buying team
- The third-party logistics provider
- The vendor/supplier (Correct answer)
- The store manager
Correct answer: The vendor/supplier
In a VMI arrangement, the vendor takes ownership of monitoring stock levels and deciding when and how much to replenish at the retailer's location.
Question 2: Which metric best measures how efficiently a retailer converts inventory investment into sales revenue over a given period?
- Gross margin return on investment (GMROI) (Correct answer)
- Inventory turnover ratio
- Days of supply (DOS)
- Sell-through rate
Correct answer: Gross margin return on investment (GMROI)
GMROI combines gross margin and inventory cost, showing the gross profit earned for every dollar invested in inventory.
Question 3: A retailer's distribution center receives a mixed-SKU pallet that must be broken down and re-sorted before store delivery. This process is called:
- Cross-docking
- Pick-and-pack
- Sortation (Correct answer)
- Slotting
Correct answer: Sortation
Sortation is the DC process of separating mixed units or cases by destination store or SKU after receiving.
Question 4: When a retailer sets a reorder point (ROP), which two variables are the primary inputs?
- Lead time and average daily demand (Correct answer)
- Selling price and cost of goods
- Safety stock and gross margin
- Order frequency and vendor discount
Correct answer: Lead time and average daily demand
ROP = average daily demand × lead time (plus safety stock), making lead time and daily demand the core inputs.
Question 5: A fashion retailer receives 500 units of a seasonal jacket but only sells 350 by season end. What is the sell-through rate?
- 30%
- 50%
- 70% (Correct answer)
- 140%
Correct answer: 70%
Sell-through = units sold ÷ units received = 350 ÷ 500 = 70%.
Question 6: Which supply chain strategy involves a retailer receiving goods at a DC and immediately transferring them to outbound trucks with little or no storage time?
- Drop shipping
- Cross-docking (Correct answer)
- Flow-through replenishment
- Postponement
Correct answer: Cross-docking
Cross-docking transfers inbound shipments directly to outbound vehicles, minimizing storage time and DC handling costs.
Question 7: A retailer's purchase order specifies a 'routing guide.' What does this document govern?
- The negotiated cost of goods from the supplier
- The approved carriers, packaging, and labeling requirements for supplier shipments (Correct answer)
- The store-level planogram for product display
- The markdown schedule for end-of-season clearance
Correct answer: The approved carriers, packaging, and labeling requirements for supplier shipments
A routing guide outlines the retailer's preferred carriers, shipment methods, packaging standards, and compliance requirements that vendors must follow.
CRA Retail Supply Chain & Replenishment 2
A retailer uses a vendor-managed inventory (VMI) model.
Which party is primarily responsible for determining replenishment quantities under this arrangement?