Supply Chain Management Operations & Supply Chain Management 2 — Questions and Answers
Question 1: Which inventory replenishment strategy triggers an order only when stock falls to a predetermined reorder point?
- Periodic review system
- Continuous review system (Correct answer)
- Just-in-time replenishment
- Vendor-managed inventory
Correct answer: Continuous review system
A continuous review system monitors inventory levels constantly and places an order whenever stock drops to the reorder point.
Question 2: In supply chain risk management, 'supply disruption risk' most directly refers to:
- Fluctuations in customer demand
- A supplier's inability to deliver materials on time or at all (Correct answer)
- Currency exchange rate volatility
- Transportation network congestion
Correct answer: A supplier's inability to deliver materials on time or at all
Supply disruption risk arises when a supplier fails to provide required inputs due to events like natural disasters, strikes, or financial failure.
Question 3: A company reduces its supplier base from 50 vendors to 10 strategic partners. This is an example of:
- Horizontal integration
- Supplier rationalization (Correct answer)
- Backward integration
- Outsourcing
Correct answer: Supplier rationalization
Supplier rationalization is the deliberate reduction of the supplier base to foster deeper relationships and reduce management complexity.
Question 4: Which performance metric measures the percentage of customer orders fulfilled completely from available stock without backorders?
- Inventory turnover ratio
- Fill rate (Correct answer)
- Order cycle time
- Perfect order rate
Correct answer: Fill rate
Fill rate measures the proportion of customer demand satisfied immediately from on-hand inventory, indicating service level effectiveness.
Question 5: The concept of 'postponement' in supply chain management involves:
- Delaying payment terms with suppliers
- Deferring product customization until closer to the point of sale (Correct answer)
- Postponing capital investment in warehouse infrastructure
- Delaying new product launches to avoid demand uncertainty
Correct answer: Deferring product customization until closer to the point of sale
Postponement delays differentiation activities to the latest possible point, reducing finished goods inventory and improving responsiveness to actual demand.
Question 6: Cross-docking in distribution operations primarily eliminates:
- The need for transportation
- Storage time and put-away costs in a warehouse (Correct answer)
- Supplier quality inspections
- Customer order processing steps
Correct answer: Storage time and put-away costs in a warehouse
Cross-docking transfers incoming shipments directly to outbound vehicles with minimal or no storage, reducing warehousing costs and handling time.
Question 7: A manufacturer uses a 'make-to-stock' production strategy. Which situation best fits this approach?
- Custom aircraft interiors built to individual airline specifications
- Standard consumer electronics produced in advance of confirmed orders (Correct answer)
- Specialty pharmaceutical compounds mixed after physician prescriptions
- Bespoke wedding cakes designed per customer request
Correct answer: Standard consumer electronics produced in advance of confirmed orders
Make-to-stock produces goods before orders are received based on demand forecasts, suited to standardized products with predictable demand like consumer electronics.
Supply Chain Management Operations & Supply Chain Management 2
Which inventory replenishment strategy triggers an order only when stock falls to a predetermined reorder point?