Supply Chain Management Operations & Supply Chain Management 4 — Questions and Answers
Question 1: Which forecasting approach uses a weighted average of past demand observations where more recent data receives higher weights?
- Simple moving average
- Exponential smoothing (Correct answer)
- Linear regression
- Delphi method
Correct answer: Exponential smoothing
Exponential smoothing applies geometrically declining weights to past observations, giving the most recent data the greatest influence on the forecast.
Question 2: In lean manufacturing, 'muda' refers to:
- Continuous improvement activities
- Waste — any activity that consumes resources without adding customer value (Correct answer)
- Standardized work procedures
- A type of kanban signal card
Correct answer: Waste — any activity that consumes resources without adding customer value
Muda is the Japanese term for waste, encompassing the seven classic lean waste types (overproduction, waiting, transport, over-processing, inventory, motion, defects).
Question 3: A company ships products using a 3PL provider that also manages its warehouse and customs clearance. This bundling of services best describes:
- Drop-shipping
- Outsourced logistics (3PL) (Correct answer)
- Fourth-party logistics (4PL)
- Freight brokerage
Correct answer: Outsourced logistics (3PL)
A third-party logistics (3PL) provider handles outsourced logistics services — transportation, warehousing, and value-added services — on behalf of a shipper.
Question 4: Which demand pattern is characterized by a consistent upward or downward movement in sales over time?
- Seasonality
- Cyclicality
- Trend (Correct answer)
- Random variation
Correct answer: Trend
A trend is a long-term, systematic upward or downward direction in demand data, distinct from seasonal or random fluctuations.
Question 5: Safety stock is primarily held to protect against:
- Planned production downtime
- Variability in demand and/or lead time (Correct answer)
- Bulk purchase discounts
- Seasonal demand peaks
Correct answer: Variability in demand and/or lead time
Safety stock buffers against uncertainty caused by unpredictable fluctuations in customer demand or supplier lead times to prevent stockouts.
Question 6: In project management, the critical path is defined as the sequence of activities that:
- Has the most expensive tasks in the project
- Determines the longest duration and therefore the minimum project completion time (Correct answer)
- Contains the highest-risk activities
- Is scheduled first in the Gantt chart
Correct answer: Determines the longest duration and therefore the minimum project completion time
The critical path is the longest sequence of dependent tasks, and any delay on it directly delays the entire project's finish date.
Question 7: Which purchasing strategy involves awarding the same contract to multiple suppliers to reduce dependency on any single source?
- Single sourcing
- Dual or multiple sourcing (Correct answer)
- Global sourcing
- Sole sourcing
Correct answer: Dual or multiple sourcing
Dual or multiple sourcing splits volume among two or more suppliers, reducing supply disruption risk but potentially sacrificing economies of scale.
Supply Chain Management Operations & Supply Chain Management 4
Which forecasting approach uses a weighted average of past demand observations where more recent data receives higher weights?