CRA Retail Supply Chain & Replenishment 3 — Questions and Answers
Question 1: In demand planning, a 'cannibalization effect' occurs when:
- A new SKU steals sales from an existing SKU in the same category (Correct answer)
- A competitor's promotion reduces your store traffic
- Seasonal demand spikes deplete safety stock
- A supplier ships a substitute product without approval
Correct answer: A new SKU steals sales from an existing SKU in the same category
Cannibalization happens when a newly introduced product draws sales away from an existing product within the same retailer's assortment.
Question 2: A grocery retailer uses continuous replenishment planning (CRP). What data does the retailer typically share with its supplier to enable this?
- Annual budget forecasts only
- Point-of-sale data and current inventory levels (Correct answer)
- Supplier cost sheets and margin targets
- Store labor schedules
Correct answer: Point-of-sale data and current inventory levels
CRP relies on the retailer sharing real-time or near-real-time POS and inventory data so the supplier can automatically generate replenishment orders.
Question 3: Which term describes the practice of positioning inventory closer to end customers to reduce delivery lead times?
- Centralization
- Safety stocking
- Forward deployment (Correct answer)
- Postponement
Correct answer: Forward deployment
Forward deployment places inventory at regional DCs or forward stocking locations nearer to customers, cutting last-mile delivery time.
Question 4: A retailer calculates its weeks of supply (WOS) as 8, but the industry standard for that category is 4. What does this most likely indicate?
- The retailer is understocked and at risk of stockouts
- The retailer may be overstocked, tying up excess capital (Correct answer)
- The retailer's sell-through rate is too high
- The supplier's lead time is too short
Correct answer: The retailer may be overstocked, tying up excess capital
A WOS of 8 versus a standard of 4 suggests twice the normal inventory on hand, indicating potential overstock and excess working capital tied up.
Question 5: A retailer adopts a 'pull' replenishment system rather than a 'push' system. What is the key distinguishing characteristic?
- Inventory is allocated to stores based on supplier production schedules
- Replenishment is triggered by actual consumer demand signals at store level (Correct answer)
- Orders are placed in fixed quantities at fixed intervals regardless of sales
- The DC pushes product to stores based on seasonal forecasts
Correct answer: Replenishment is triggered by actual consumer demand signals at store level
A pull system replenishes only what has been consumed, driven by real demand signals, reducing overstock and waste.
Question 6: What is the primary purpose of an advance ship notice (ASN) in retail logistics?
- To authorize payment to the supplier after delivery
- To provide the DC with pre-shipment details enabling faster receiving (Correct answer)
- To notify the store of an upcoming markdown event
- To reserve carrier capacity for outbound store deliveries
Correct answer: To provide the DC with pre-shipment details enabling faster receiving
An ASN gives the receiving DC detailed information about an inbound shipment (contents, quantities, packaging) before it arrives, accelerating the check-in process.
Question 7: Which cost component is NOT typically included in a retailer's total landed cost calculation for imported goods?
- Ocean freight charges
- Import duties and tariffs
- Store-level labor for stocking shelves (Correct answer)
- Insurance and port handling fees
Correct answer: Store-level labor for stocking shelves
Total landed cost covers all expenses to get goods to the DC (freight, duties, insurance, handling), but in-store stocking labor occurs after delivery and is excluded.
CRA Retail Supply Chain & Replenishment 3
In demand planning, a 'cannibalization effect' occurs when: