Supply Chain Operations & Optimization Flashcards

Which concept describes the amplification of demand variability as orders move upstream in the supply chain?

Answer: Bullwhip effect

The bullwhip effect occurs when small fluctuations in end-customer demand cause increasingly large swings in upstream orders.

Collaborative Planning, Forecasting, and Replenishment (CPFR) is best described as:

Answer: A joint process where trading partners share data to create aligned forecasts and replenishment plans

CPFR links retailers and suppliers through shared forecasts and replenishment plans to reduce inventory and improve service.

Economic Order Quantity (EOQ) minimizes the sum of which two costs?

Answer: Ordering cost and carrying (holding) cost

EOQ balances the cost of placing orders (ordering cost) against the cost of holding inventory (carrying cost).

A '3PL' provider differs from a '4PL' provider primarily in that the 4PL:

Answer: Manages multiple 3PLs and provides overall supply chain orchestration

A 4PL acts as a lead logistics provider, coordinating multiple 3PLs and other service providers on behalf of the client.

Which KPI directly measures how efficiently a supply chain converts inventory investment into sales revenue?

Answer: Gross margin return on investment (GMROI)

GMROI measures gross profit generated per dollar of average inventory, reflecting inventory productivity.

In supply chain network design, a 'hub-and-spoke' model centralizes flows through:

Answer: A central hub that consolidates and sorts shipments before forwarding to destinations

Hub-and-spoke consolidates shipments at a central point, enabling economies of scale on high-volume lanes.

Which approach to supplier performance management involves sharing scorecards and jointly developing improvement plans?

Answer: Supplier development

Supplier development is a proactive, collaborative approach to improving supplier capabilities through shared goals and joint action plans.