Supply Chain Management Operations & Supply Chain Management 5

Question 1

A retailer notices that small fluctuations in end-customer demand create increasingly large order swings upstream in the supply chain. This is called:

Accepted Answer

The bullwhip effect

Answer

The bullwhip effect describes how demand variability amplifies as it moves upstream through a supply chain, causing excessive inventory swings at each tier.

Question 2

Which global trade term (Incoterm) means the seller delivers goods to a named port and pays for export clearance and ocean freight, but the buyer assumes risk once goods are loaded on the vessel?

Accepted Answer

FOB (Free On Board)

Answer

Under FOB, the seller is responsible until goods pass the ship's rail at the named port of shipment; risk and cost then transfer to the buyer.

Question 3

A Six Sigma project reduces defects from 6,210 DPMO to 233 DPMO. What sigma level has the process reached?

Accepted Answer

Six sigma

Answer

Six sigma performance corresponds to approximately 3.4 DPMO, but the widely cited 233 DPMO is closer to five sigma; 3.4 DPMO defines true six sigma.

Question 4

Which cost category includes expenses such as obsolescence, storage space, insurance, and capital tied up in inventory?

Accepted Answer

Carrying (holding) costs

Answer

Carrying costs (holding costs) encompass all costs associated with holding inventory, including capital cost, storage, insurance, deterioration, and obsolescence.

Question 5

In supply chain sustainability, 'reverse logistics' specifically refers to:

Accepted Answer

The flow of products from customers back through the supply chain for return, repair, recycling, or disposal

Answer

Reverse logistics manages the upstream movement of goods from end-users back to manufacturers or recyclers for recovery, refurbishment, or disposal.

Supply Chain Management Practice Test

Supply Chain Management Practice Test

Supply Chain Management Operations & Supply Chain Management 5