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Supply Chain Professional Practice Questions

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1, A supply chain consists of which of the following components (Choose all that apply):

A. Retailers

B. distributors

C. Transporters

D. storage facilities

E. suppliers

F. None of the choices.

ANSWER: A B C D E

A supply chain is a network of retailers, distributors, transporters, storage facilities and suppliers that participate in the sale, delivery and production of a particular product. The concept of supply chain often involves backward integration - acquiring ownership of one's supply chain (in the hope of reducing supplier power and thus reducing input costs).

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2, The concept of supply chain often involves what type of integration?

A. Backward

B. Functional

C. Cross border

D. Downward

E. None of the choices.

ANSWER: A


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3, Which of the following are the functional components of most supply chains (Choose all that apply):

A. demand planning

B. manufacturing planning and scheduling

C. supply planning

D. transportation planning


ANSWER: A B C D

Supply chains usually include four functional components:

1. demand planning

2. manufacturing planning and scheduling

3. supply planning

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4. transportation planning

Some supply chains deploy the push system, while some deploy the pull one. Most chains deploy a mixture of both.

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4, What systems are triggered by interpretation of the expected demand and scheduling of supply to meet that demand (Choose all that apply):

A. Push

B. Pull

C. Just in time

D. EOQ-II


ANSWER: A

Push systems are triggered by interpretation of the expected demand and scheduling of supply to meet that demand. MRP does have elements of the push system built-in. Pull systems have replenishment triggered by the usage or depletion of stock. JIT is pull based.

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5, Which of the following are the major SCM flows (Choose all that apply):

A. The product flow

B. The information flow

C. The finances flow

D. The organization flow


ANSWER: A B C

Shorts for supply chain management, SCM refers to the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. The 3 major SCM flows:

l The product flow: the movement of goods from a supplier to a customer, as well as any customer returns or service needs

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l The information flow: transmitting orders, updating the status of delivery and the likes

l The finances flow: credit terms, payment schedules, consignment, title ownership arrangements …etc

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6, Which of the following is an industry term for methodologies and technologies that helps an enterprise manages customer relationships in an organized and efficient manner?

A. SCM

B. ERP

C. CRM

D. ERM

E. CSCP


ANSWER: C

Don’t confuse SCM with CRM. Shorts for Customer Relationship Management, CRM is an industry term for methodologies and technologies that helps an enterprise manages customer

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relationships in an organized and efficient manner. Even though customer satisfaction is the ultimate goal of SCM, CRM is not a topic covered by this CSCP exam.

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7, Supply chain management solutions focus on providing:

A. real-time data from all links of the chain.

B. offline analytical instruments from all links of the chain.

C. online communication policies from all links of the chain.

D. None of the choices.

ANSWER: A

Supply-chain collaboration is an effort which supposes to connect and invigorate enterprises and suppliers. In fact, collaboration is a MUST for your chain to run efficiently. Such effort is usually implemented by sharing information and even system accesses between the chain partners. Supply chain management solutions focus on providing more real-time data from all links of the chain. These solutions often span an enterprise's communication with suppliers, and product design collaboration is often the critical component.

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8, The technical methods of collaboration among chain partners often involve the use of which of the technologies (Choose all that apply):

A. Ecommerce

B. Internet

C. Extranet

D. VPN


ANSWER: A B C D

The technical methods of collaboration among chain partners often involve the use of modern technologies like Ecommerce, Internet and Extranet. Short for electronic commerce, eCommerce is the buying and selling of goods and services on the Internet. In practice, this term and the term “e-business” are often used interchangeably. An extranet is a private network that uses the Internet protocol and the public communication network to securely share business information or operations with your external partners (such as your suppliers,

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vendors, partners and customers). In fact, it can be viewed as part of a company's intranet that is extended to the outside users. VPN is an implementation of an Extranet.

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9, A successful extranet for chain members MUST be (choose the BEST answer):

A. safe and secure.

B. fast and powerful.

C. on and offline capable


ANSWER: A

To implement an extranet, you need firewall server management, the issuance and use of digital certificates (or similar means of user authentication), encryption of transmitted data, and the use of virtual private network (VPN) technologies that tunnel through the public internet.

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10, In general, what products are mostly commodities with very elastic demand, while low volume/high margin and designer items are demand in-elastic?

A. High volume/ low margin products

B. Low volume/ high margin products

C. Designer products


ANSWER: A

To provide value through the supply chain, you must make the connection between the chain and the products, demand patterns, and markets which constitute the broad organization strategy. The broad categories of products must be identified, cos your organization will need to have an appropriate supply chain to support each of them:

l High volume/ low margin products

l Low volume/ high margin products

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l Designer products

In general, high volume/low margin products are mostly commodities with very elastic demand, while low volume/high margin and designer items are demand in-elastic.

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11, For products that are high volume/low margin, which of the following statements are true (Choose all that apply):

A. the supply chain should be able to efficiently move items through the supply system in a continuous flow

B. steady demand, low technology, well established distribution system and commodity pricing are needed

C. management should aim at minimizing supply chain costs by keeping inventory in days of supply

D. intense coordination of transportation logistics is not important


ANSWER: A B C

High volume/low margin:

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l the supply chain should be able to efficiently move items through the supply system in a continuous flow

l steady demand, low technology, well established distribution system and commodity pricing are needed

l management should aim at minimizing supply chain costs by keeping inventory in days of supply and by intense coordination of transportation logistics

l stability should be maintained through long term relationships with suppliers

l suppliers should be able to dependably furnish raw materials that need no incoming inspection

l orders should be delivered directly to production lines in precise lot sizes

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12, For products that are low volume/high margin, the mostly used regular SKUs often exhibit what sort of demand pattern?

A. lumpy

B. flat

C. seasonal


ANSWER: A

Low volume/high margin

l use mostly regular SKUs which exhibit the classically “lumpy” demand pattern

l can mostly be forecast with reasonable accuracy over a long horizon

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l requires flexibility and agility in the supply system

l may require modest buffer stocks of finished goods inventory. Keep in mind though, that inventory risk in such products is significant, as the products are expensive (relatively)

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13, For products that are low volume/high margin, demand can mostly be forecast with reasonable accuracy over a long horizon.

A. True

B. False

ANSWER: A





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14, For products that are low volume/high margin, which of the following elements are important?

A. flexibility and agility

B. pure performance

C. security and safety

D. cost effectiveness


ANSWER: A



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15, Which of the following statements correctly describe the nature of designer products (Choose all that apply):

A. usually short life

B. demand forecasting is mostly impossible

C. pricing is usually generous

D. often do not get manufactured on the same equipment as the standard items


ANSWER: A B C

Designer products:

l usually short life

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l demand forecasting is mostly impossible

l pricing is usually generous

l often manufactured on the same equipment as the standard items

l requires flexibility, quick response, rapid design and readily available production capacity

l waste is inherent in the supply process when rapid service is to be rendered

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16, Manufacturing flexibility can be achieved via (Choose all that apply):

A. Small Lot Production

B. More Rapid Production Cycle Times

C. Scheduling Techniques to Signal Production in Quick Succession


ANSWER: A BC

How is manufacturing flexibility achieved? First, you must be able to achieve the following:

l Small Lot Production

l More Rapid Production Cycle Times

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l Scheduling Techniques to Signal Production in Quick Succession

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17, Which of the following are the valid ways to compress time (Choose all that apply):

A. Implement concurrent engineering techniques

B. Set up reduction programs to minimize set up time

C. Compress cycle time through industrial engineering and process realignment

D. Develop lot sizing criteria for small lot production


ANSWER: A B C D

You must be able to compress time. Time has become a precious commercial commodity, and you cannot afford to squander it through excessive down time, leisurely set-ups, and long queues and production cycles. To compress time, you may do the following:

l Implement concurrent engineering techniques

l Set up reduction programs to minimize set up time

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l Compress cycle time through industrial engineering and process realignment

l Develop lot sizing criteria for small lot production

l Develop pull system scheduling and inventory systems

l Develop time and flexibility metrics for your own environment

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18, Work cells are usually staffed by team members who are empowered to (Choose all that apply):

A. self inspect their work

B. adhere to the set schedule

C. meet productivity metrics

D. produce greater quantities of goods in smaller lots

E. authorize purchases

F. meet customers

G. None of the choices.

ANSWER: A B C D

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Work cells are usually staffed by team members who have a strong sense of quality: they are employees who are empowered to:

l self inspect their work

l adhere to the set schedule

l meet productivity metrics

l produce greater quantities of goods in smaller lots

l carry out production with less inventory and higher quality

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19, How do you achieve efficient work cells manufacturing (Choose all that apply):

A. aim at lean and agile manufacturing

B. design a plant layout for greater throughput and productivity

C. develop and encourage product oriented work cell organization

D. develop supply based continuous flow manufacturing;

E. deploy asynchronous manufacturing techniques


ANSWER: A B C

To achieve efficient work cells manufacturing, the following must be done:

l aim at lean and agile manufacturing

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l design a plant layout for greater throughput and productivity

l develop and encourage product oriented work cell organization

l develop demand based continuous flow manufacturing;

l deploy synchronous manufacturing techniques

l establish cross functional work teams in both cellular and traditional organizations;

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20, FMS is principally used in mid-volume mid-variety production.

A. True

B. False

ANSWER: A

Shorts for flexible manufacturing system, FMS is a configuration of computer-managed numerical work stations where materials are automatically handled and machine loaded. Such a system is principally used in mid-volume mid-variety production, with two or more computer-managed numerical work stations to perform a series of operations, an integrated material transport system and a computer to control the flow of materials, tools, and information, and an auxiliary work stations to control loading, unloading, cleaning and inspection.

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21, Which of the following are the benefits of a FMS (Choose all that apply):

A. lowering indirect labor cost

B. providing better access security control

C. minimizing scrap, re-work, and material wastage

D. requiring less skilled labor

E. eliminating the need for batch processing

F. reducing the production lead time


ANSWER: C D E F

The benefits of a FMS are:

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l lowering direct labor cost

l minimizing scrap, re-work, and material wastage

l requiring less skilled labor

l eliminating the need for batch processing

l reducing the production lead time

l providing better process control

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22, Which of the following is a financial analysis technique that accompanies the implementation of constraints management with a focus on maximizing contribution margins through identification and exploitation of constraints?

A. Throughput Accounting

B. Management Accounting

C. Account costing

D. Material Budgeting


ANSWER: A

All factories on earth have constraints. Sometimes these constraints are being referred to as bottlenecks. Regardless of how they are called, the “Theory of Constraints” focuses your attention on successive management of constraints by a systematic process beginning with identification and following through to elimination. “Throughput Accounting" is a financial analysis technique that accompanies the implementation of constraints management with a

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focus on maximizing contribution margins through identification and exploitation of constraints.

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23, Perfect fill rate tells:

A. if you are achieving the goal of delighted end customers.

B. how quickly you get materials from suppliers, convert them into product, ship to customers, collect the receivables and handle the payables.

C. the amount of time between the placing of an order and the receipt of the goods ordered.

D. how fast you are able to move materials through the supply chain.


ANSWER: A

Perfect fill rate: it tells if you are achieving the goal of delighted end customers.

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24, Cash to cash cycle tells:






ANSWER: B

Cash to cash cycle: it is the indicator of chain velocity that tells how quickly you get materials from suppliers, convert them into product, ship to customers, collect the receivables and handle the payables.

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25, Inventory turn tells:






ANSWER: D

Inventory turns: also known as turnover, it is the indicator of the speed with which you are able to move materials through the supply chain. For a company, it is the ratio of annual sales to inventory or the fraction of a year that an average item remains in inventory. Note that low turnover indicates poor efficiency.

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26, “Inventory turns” is also known as (Choose all that apply):

A. turnover

B. fill over

C. turn rate

D. turn to turn ratio


ANSWER: A

It is the indicator of the speed with which you are able to move materials through the supply chain. For a company, it is the ratio of annual sales to inventory or the fraction of a year that an average item remains in inventory. Note that low turnover indicates poor efficiency.

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27, The basic function of inventory is to insulate the production process from changes in the environment.

A. True

B. False

ANSWER: A

In regards to inventory: The basic function of inventory is to insulate the production process from changes in the environment. Even though there is a cost to hold stock, you should always attempt to lower such cost (as it is not adding value to the production process).

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28, What indicate how well you repeatedly receive and manufacture in small lots and fulfill customer needs?

A. Lot sizes

B. Fill rate

C. Cash count

D. Satisfaction index


ANSWER: A

Lot sizes: includes the average lot size for purchases and the average lot size in manufacturing. They indicate how well you repeatedly receive and manufacture in small lots and fulfill customer needs.

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29, Velocity can be defined as:

A. the average number of units sold by day or week for a grouping of merchandise.

B. the aggregate number of units sold by day or week for a grouping of merchandise.

C. the average number of units sold by hours or days for a grouping of merchandise.


ANSWER: A

Velocity can be defined as “The average number of units sold by day or week for a grouping of merchandise. Indicates the impact on inventory levels (fast sales can cause shortages, slow sales can cause excess stock)”.

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30, The simplest form of BOM lists (Choose all that apply):

A. the Materials being used.

B. the Quantities being used.

C. the Skills being used.

D. the Machines being used.


ANSWER: A B

Shorts for Bill of Materials, it is a table-like document that lists all the items that go into a finished good or subassembly. The simplest form of BOM lists only the Materials and Quantities being used to manufacture a finished good or sub assembly.

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31, Which of the following statements about BOM is true (Choose all that apply):

A. It describes the parent/child relationship between an assembly and its component parts or raw materials.

B. It can be nested.

C. It can be structured in a tree like format.

D. It may indicate all the steps of assembly.


ANSWER: A B C D

A BOM describes the parent/child relationship between an assembly and its component parts or raw materials. BOM can be nested. In addition, BOM can be structured in a tree like format to indicate all the steps of assembly. In such a tree, the finished good or subassembly is shown as root. Note that a BOM that is flat is perceived to be better than a staged one, cos

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a flat BOM can accommodate parallel progresses. We will talk about this in the MRP section. Always remember, BOMs are needed to support the assembly process. Also, the BOM for products released to manufacturing is a key part of a MRP system's database.

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32, Which of the following statements are true about a primary bill (Choose all that apply):

A. It is a list of components that are most frequently use for building a product.

B. It is always the default bill to use.

C. You must define a primary bill before you can define an alternate.

D. A primary bill can have many alternate bills, and vice versa.


ANSWER: A B C

A primary bill is a list of components that are most frequently use for building a product. An alternate bill is another list of components for the same basic assembly. Note that:

l The primary bill is always the default.

l You must define a primary bill before you can define an alternate.

l A primary bill can have many alternate bills, but not vice versa.

l Any bill of material type can have an alternate.

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33, What is known as a type of standard bill that provides a set of option choices made from a model bill that comprises a buildable product?

A. Configuration Bill

B. Primary Bill

C. Alternate Bill

D. Process Bill

E. Model Bill


ANSWER: A

Configuration Bill - a type of standard bill that provides a set of option choices made from a model bill that comprises a buildable product. In a computerized system, configuration items and bills are automatically created from model bills after a customer chooses her options on a sales order.

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34, What type of bill defines the list of options and option classes you can choose for ordering a configuration?


B. Primary Bill

C. Alternate Bill

D. Process Bill

E. Model Bill

F. Planning Bill


ANSWER: E

Model Bill of Material - it defines the list of options and option classes you can choose for ordering a configuration. It specifies mandatory components or included items that are required for each configuration of that model.

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35, What type of bill represents a BOM structure that includes a percentage distribution for its components?


B. Primary Bill

C. Alternate Bill

D. Process Bill

E. Model Bill

F. Planning Bill


ANSWER: F

Planning Bill of Material - It is a BOM structure that includes a percentage distribution for its components. Keep in mind that the percentages associated with the components on such a

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bill do not need to add to 100%. Also, planning items are commonly nested within one another.

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36, What bill is typically used to prototype variations from the primary bill that produces the same assembly?

A. Engineering Bill

B. Primary Bill

C. Alternate Bill

D. Process Bill

E. Model Bill

F. Planning Bill


ANSWER: A

Engineering Bills of Material - This is often used as an alternate for a manufacturing bill. It is typically used to prototype variations from the primary bill that produces the same assembly.

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37, The non-stocked assembly that groups together material needed to produce a subassembly is known as:

A. Phantom Assembly

B. Shadow Assembly

C. Image Assembly

D. Classic Assembly


ANSWER: A

Phantom Assembly - It is a non-stocked assembly that groups together material needed to produce a subassembly. When you create a BOM for a parent item, you can specify whether a component is a phantom. In general, one BOM can represent a phantom subassembly for one parent item, and a stocked subassembly for another parent item.

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38, What BOM related process involves the determination of an item's gross requirements from the MPS for immediate parents that are end items, the planned order releases for parents below the MPS level, as well as any other requirements?

A. explosion

B. derivation

C. aggregation

D. profiling


ANSWER: A

As new work orders are suggested (by, let’s say, a MRP system), additional material requirements will be created for the components needed by these new work orders, which in turns will create additional suggested work orders and purchase orders. The process will continue down through all levels of the BOM and is therefore known as "explosion." The explosion process involves the determination of an item's gross requirements from the MPS

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for immediate parents that are end items, the planned order releases for parents below the MPS level, as well as any other requirements (such as demand for replacement parts).

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39, What is the commonly used identification of a particular product that allows it to be tracked for inventory purposes?

A. SKU

B. CRU

C. ADU

D. ADR


ANSWER: A

Short for stockkeeping unit, SKU is an identification of a particular product that allows it to be tracked for inventory purposes. Typically, an SKU is alphanumeric and is associated with any purchasable item in a catalog. It may or may not be made visible to a customer, and is definitely not the same as a product model number from a manufacturer (although the model

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number could be used to form all or part of the SKU). The SKU is established by the merchant or the manufacturer, not by any industry or trade association.

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40, The SKU is established by an industry wide trade association.

A. True

B. False

ANSWER: B

Short for stockkeeping unit, SKU is an identification of a particular product that allows it to be tracked for inventory purposes. Typically, an SKU is alphanumeric and is associated with any purchasable item in a catalog. It may or may not be made visible to a customer, and is definitely not the same as a product model number from a manufacturer (although the model number could be used to form all or part of the SKU). The SKU is established by the merchant or the manufacturer, not by any industry or trade association.

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41, The basic assumption of EOQ is that:

A. as the lot size increases, the setup cost per unit decreases, since setup costs can be amortized over a larger quantity of parts.

B. as the lot size increases, the setup cost per unit increases, since setup costs can be amortized over a larger quantity of parts.

C. as the lot size decreases, the setup cost per unit decreases, since setup costs can be amortized over a larger quantity of parts.


ANSWER: A

Shorts for Economic Order Quantity, EOQ is the amount of orders that minimizes total variable costs required to order and hold inventory. It can also be described as the most economical quantity of parts to order at one time, considering the applicable procurement and inventory costs. “The basic assumption of EOQ is that as the lot size increases, the setup

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cost per unit decreases, since setup costs can be amortized over a larger quantity of parts. Conversely, as the lot size increases, the inventory carrying cost per unit increases, because parts are carried in inventory for a longer period of time. The EOQ is determined by the point at which the total of inventory and setup costs is at a minimum. Thus EOQ drives to minimize unit cost, but not total operating cost”.

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42, To use EOQ, what assumptions must be made (Choose all that apply):

A. Constant demand rate

B. Whole lots

C. Holding cost and ordering cost

D. Item independence

E. Certainty in demand, lead time and supply


ANSWER: A B C D E

To use EOQ, 5 assumptions must be made:

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l Constant demand rate

l Whole lots

l Holding cost and ordering cost

l Item independence

l Certainty in demand, lead time and supply

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43, Which of the following represents the number of units of material or a manufactured item that can be purchased or produced within the lowest unit cost range?

A. EOQ

B. EOQ Plus

C. ELS

D. JIT-2


ANSWER: C

Shorts for Economic Lot Size, ELS represents the number of units of material or a manufactured item that can be purchased or produced within the lowest unit cost range. The determination of ELS involves reconciling the decreasing trend in preparation unit costs and

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the increasing trend in unit costs (of storage, interest, insurance, depreciation, and other costs) incident to ownership, as the size of the lot is increased.

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44, With reorder point planning, a reorder level is established for each item based on what criteria (Choose all that apply):

A. usage

B. lead time

C. safety stock needs

D. sales level


ANSWER: A B C

An example of reorder point calculation can be found here: http://www.usfca.edu/~villegas/classes/984-307/307ch12/sld022.htm

Many organizations use a minimum stock level and reorder point to order and schedule materials. With reorder point planning, a reorder level is established for each item based on:

o usage

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o lead time

o safety stock needs

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45, Which of the following are the biggest problems with reorder point planning (Choose all that apply):

A. it only works for short to medium term planning

B. it only works with simple BOM

C. it is not easy to be maintained at “regular enough” intervals

D. it can easily lead to stocking levels lower than what are actually needed


ANSWER: B C

The biggest problems with reorder point planning:

o it only works for very short term planning

o it only works with simple BOM

o it is not easy to be maintained at “regular enough” intervals

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o it can easily lead to stocking levels higher than what are actually needed

o whenever a finished good, subassembly, or component gets delayed, all of the supporting schedules will get delayed too

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46, Based on the JIT philosophy, one should (Choose all that apply):

A. Make only what he/she can sell. B. Make only when he/she can sell it. C. Make as late as possible. D. Make as quick as possible. E. None of the choices.

ANSWER: A B C

O'Grady’s definition of JIT is more strategic 1 . He said that based on the JIT philosophy, one should:

• Make only what he/she can sell. • Make only when he/she can sell it. • Make as late as possible.

1 O'Grady, P J. Putting the Just-in-time Philosophy into Practice: A Strategy for Production Managers

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47, Which of the following are benefits that can be produced by JIT (Choose all that apply):

A. Reduced levels of in-process inventories, purchased goods, and finished goods. B. Reduced space requirements. C. Increased product quality and reduced scrap and rework. D. Reduced manufacturing lead time. E. Greater flexibility in changing the production sales. F. Smoother sales flow with fewer disruptions. G. None of the choices.

ANSWER: A B C D

Based on Cheng and Podolsky’s summary 2 we may conclude that the benefits of implementing JIT, in general, may include:

• Reduced levels of in-process inventories, purchased goods, and finished goods. • Reduced space requirements.

2 Cheng and Podolsky, Just-in-Time Manufacturing, pg. 10

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• Increased product quality and reduced scrap and rework. • Reduced manufacturing lead time. • Greater flexibility in changing the production mix. • Smoother production flow with fewer disruptions. • Worker participation in problem solving. • Pressure to build good relationships with vendors. • Increased productivity levels and utilization of equipment. • Reduction in the need for certain indirect labor.

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48, What is known as a manufacturing strategy in which parts are produced or delivered only as needed?

A. Kanban

B. Pull bin

C. Push bin

D. Dual Trays


ANSWER: A

Kanban is often associated with JIT. By definition, Kanban is a manufacturing strategy in which parts are produced or delivered only as needed. Toyota Motor has been credited with developing the Kanban system, which takes its name from the Japanese word for "sign" or "placard". Being recognized as one of the primary tools of JIT system, Kanban maintains an orderly and efficient flow of materials throughout the entire manufacturing process.

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49, With Kanban square, an assembly line or work cell with a square drawn on the bench or floor between two factories is used.

A. True

B. False

ANSWER: B

Kanban square - it is used on an assembly line or work cell with a square drawn on the bench or floor between two operators. When one operator has finished a part, instead of giving it to the next operator, she would put it into the Kanban square and wait for it to be taken before herself is allowed to make another one.

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50, With double card Kanban, what card is used to authorize the movement of material from the supplier to the using company?

A. the "move" card

B. the "production" card

C. the “flow” card

D. the “close” card


ANSWER: A

Double card Kanban - the "move" card is used to authorize the movement of material from the supplier to the using company, while the "production" card is used by the supplying company to launch another batch of work into his manufacturing facility when he returns with an empty container from the customer.

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51, Which of the following are the advantages of the Kanban concept (Choose all that apply):

A. it allows you to only make what is needed when it is needed

B. it allows for a more responsive method of satisfying needs

C. it requires a simpler control system

D. it requires NO buffer stock


ANSWER: A B C

The advantages of the Kanban concept are:

o it allows you to only make what is needed when it is needed

o it allows for a more responsive method of satisfying needs

o it requires a simpler control system

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o it requires less buffer stock

o it produces lower work-in-progress inventory

o it can deliver in shorter lead times

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52, In order to successfully implement TQM, one must concentrate on what key elements (Choose all that apply):

A. Ethics

B. Integrity

C. Trust

D. Training

E. Teamwork


ANSWER: A B C D E

To truly unlock the ultimate potential of TQM, it is important for you to realize that TQM is built on a foundation of ethics, integrity and trust, that it fosters openness, fairness and

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sincerity and allows involvement by everyone. As described by Nayantara Padhi 3 , in order to successfully implement TQM, one must concentrate on eight key elements:

l Ethics

l Integrity

l Trust

l Training

l Teamwork

l Leadership

l Recognition

l Communication

3 http://www.isixsigma.com/library/content/c021230a.asp

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53, One of the major criticisms of MRP is the concept of a staged Bill of Material, which:

A. ignored the potential for parallel working.

B. ignored the potential for serial working.

C. ignored the use of EOQ.


ANSWER: A

"One of the major criticisms of MRP is the concept of a staged Bill of Material, which represented the stages of manufacture and also enshrined that into a sequential process, which ignored the potential for parallel working. Work by Burbidge, showed that by flattening the Bill of Material, and parallel working not only simplified the administration of production but also reduced lead-times"4.

4 http://www.smthacker.co.uk/materials_management_stock_control.htm

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54, What is a time-phased planning chart that can help the master scheduler create the MPS?

A. master schedule

B. production plan

C. capacity plan

D. flow schedule


ANSWER: A

MPS is the product of Master Scheduling. A master schedule is a time-phased planning chart that can help the master scheduler create the MPS, which is the anticipated build schedule which applies only to items assigned to the master scheduler. The MPS drives the MRP. It is also an essential component in many of the popular MRP-II implementations.

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55, The MRP drives the MPS.

A. True

B. False

ANSWER: B

MPS is the product of Master Scheduling. A master schedule is a time-phased planning chart that can help the master scheduler create the MPS, which is the anticipated build schedule which applies only to items assigned to the master scheduler. The MPS drives the MRP. It is also an essential component in many of the popular MRP-II implementations.

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56, Which of the following items should you master schedule (Choose all that apply):

A. end items in a make-to-stock environment

B. components in an assembly-to-order environment

C. raw materials & components in a make-to-order environment

D. item with critical impact on lower level components

E. high-value materials

F. long lead time materials

G. key production resources

H. None of the choices.

ANSWER: A B C D E F G

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Why do you master schedule? Firstly, to provide stability to materials plans. Secondly, to manage the impact on key production resources. Thirdly, to ensure the proper execution of the production plan. Which items should you master schedule?

l end items in a make-to-stock environment

l components in an assembly-to-order environment

l raw materials & components in a make-to-order environment

l item with critical impact on lower level components

l high-value materials

l long lead time materials

l key production resources

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57, MRP-2 can be thought of as (Choose all that apply):

A. a modeling technique for analyzing and controlling complicated Manufacturing operations using computer technologies.

B. a formula for calculating complicated Manufacturing operations using scientific technologies.

C. version 2 of MRP

D. a direct outgrowth and extension of MRP.


ANSWER: A D

MRP2 is not the version 2 of MRP. In fact, it stands for Manufacturing Resources Planning, which is a modeling technique for analyzing and controlling complicated Manufacturing operations using computer technologies. When the manufacturing data has been collected, the lead time and cost of every component can be predicted under any manufacturing

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conditions. And as soon as an order is received, the workload on the manufacturing organization and the delivery time can be calculated quite accurately.

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58, Variability can be induced in the supply chain by (Choose all that apply):

A. Sales processes

B. Management accounting

C. Demands communicated to suppliers

D. Interpretation of demand by suppliers


ANSWER: A B C D

Variability can be induced in the supply chain by:

l Sales processes - sales people are often motivated with financial incentives by short-term considerations, thus leading to feverish activity spurred by special deals at the end of the accounting period, that there are no sales at all at the beginning of the following period.

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l Management accounting - due to the need for monthly and annual accounting cycles, pressure is applied to operations management to ship things to make the numbers at the end of the accounting period. Then you should know the consequences...

l Demands communicated to suppliers - the customer frequently base their demand statements on forecasts, and that the forecast once produced is usually forgotten and never measured against reality...

l Interpretation of demand by suppliers - a process of second guessing the customers demand because you found that they do not know what they want.

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59, Actual material usage might deviate significantly from the forecast because of (Choose all that apply):

A. unusual usage activity that will probably not occur again in the future.

B. the start of a significant new trend in the usage of the product.

C. the wrong forecast formula or method being applied to the item.


ANSWER: A B C

As stated by Jon Schreibfeder,

"Today's competitive market requires accurate forecasts for the future demand of each product in inventory. We are constantly looking for ways to reduce the forecasting error (i.e., the difference between a forecast and the resulting usage). But these efforts are often frustrated by unusual activity imbedded in historic usage data" 5 .

5 http://www.effectiveinventory.com/article46.html

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Based on Jon’s reasoning, actual usage might deviate significantly from the forecast because of:

l unusual usage activity that will probably not occur again in the future.

l the start of a significant new trend in the usage of the product.

l the wrong forecast formula or method being applied to the item.

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Notes:

60, Which of the following put more weight on recent and less on past data (Choose all that apply):

A. Standard moving averages

B. Exponential average

C. Weighted average

D. EO average

E. Smoothed average


ANSWER: B C

Standard moving averages apply equal weight to the numbers. It adds the closing number for a number of time periods and divides this total by the number of periods. This results in the average over a specific time period. Exponential average puts more weight on recent data and less weight on past data. The exponential moving average applies a percentage of today's closing to yesterday's moving average. The formula used is as follow: Moving Average = ((today's close)*x) + ((yesterday's moving average)*x) while x = the selected

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percentage. Weighted average puts more weight on recent and less on past data as well. However, it works by multiplying each of the previous day's data by a predetermined weight.

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61, A typical capacity model used for capacity management has what principal categories of capacity use (Choose all that apply):

A. productive

B. nonproductive

C. idle

D. tangible

E. intangible


ANSWER: A B C

A typical capacity model used for capacity management has the following principal categories of capacity use:

o productive

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o nonproductive

o idle

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62, Rated capacity is often set as:

A. 100 per cent

B. 1.0

C. 90%

D. 99.9%


ANSWER: A

Rated capacity = productive capacity (used for producing goods as well as in process and product improvement efforts) + nonproductive capacity (uses of capacity which do not produce goods, such as set-ups, maintenance, waste, and standby) + idle capacity (capacity that is not marketable or not in demand). Rated capacity is often set as 100 per cent, which is 24 hours a day and seven days a week. If a production machine is being measured, it’s rated capacity is the full productive speed as determined by the manufacturer. This rate is without allowance for repair, setup and other kinds of downtime, and may sometimes be overstated intentionally.

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63, Demand for finished goods is an example of:

A. Independent demand

B. Dependent demand

C. Mixed demand

D. None of the choices

ANSWER: A

Independent demand refers to the demand for an item that is unrelated to the demand for other items. Demand for finished goods is one such example. On the other hand, dependent demand refers to the demand that is directly related to or derived from the BOM structure for other items or products.

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64, Which of the following types of demand can be calculated?

A. Independent demand

B. Dependent demand

C. Mixed demand


ANSWER: B

Dependant demands can be calculated, while independent demands have to be forecasted. Note that it is possible for an inventory item to have both dependent and independent demand at any given time.

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65, Which of the following refers to the planning process for predicting the demand of products and services based on forecasts?

A. Demand Planning

B. Demand Aggregation

C. Demand summarization

D. Demand Analyst

E. None of the choices

ANSWER: A

Demand Planning refers to the planning process for predicting the demand of products and services based on forecasts. By accurately forecasting customer demand, one can improve the level of customer service while decreasing costs through reducing demand uncertainty.

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66, You may achieve increasingly accurate demand forecasts by integrating volume predictions based on:

A. price elasticity

B. customer locations

C. supply base optimization

D. demand seasoning


ANSWER: A

As mentioned by Manugistics, optimized demand management can be achieved as follow 6 :

o use advanced price optimization to enhance revenue

6 http://www.manugistics.com/solutions/profitable_demand_management.asp

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o achieve increasingly accurate demand forecasts by integrating volume predictions based on price elasticity

o bring your supply and demand chains into balance, improving enterprise profitability and customer service (this is important)

o adaptively manage volatile demand, short product life cycles, and dynamic market changes (this is important)

o smooth demand over peak and valley periods (this is important)

o determine the best product mix to optimize the profitability of existing assets

o optimize price lists and customer quotes to maximize margins and gain market share

o steer demand between products, understanding and leveraging product cannibalization and halo effects (this is VERY important)

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67, Optimized demand management can be achieved via which of the following ways (choose all that apply):

A. advanced price optimization

B. bring your supply and demand chains into balance

C. adaptively manage volatile demand

D. smooth demand over peak and valley periods

E. determine the best product mix

F. None of the choices

ANSWER: A B C D E

As mentioned by Manugistics, optimized demand management can be achieved as follow 7 :

o use advanced price optimization to enhance revenue

7 http://www.manugistics.com/solutions/profitable_demand_management.asp

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o achieve increasingly accurate demand forecasts by integrating volume predictions based on price elasticity

o bring your supply and demand chains into balance, improving enterprise profitability and customer service (this is important)

o adaptively manage volatile demand, short product life cycles, and dynamic market changes (this is important)

o smooth demand over peak and valley periods (this is important)

o determine the best product mix to optimize the profitability of existing assets

o optimize price lists and customer quotes to maximize margins and gain market share

o steer demand between products, understanding and leveraging product cannibalization and halo effects (this is VERY important)

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68, Actual usage might deviate significantly from the forecast due to which of the following reasons (choose all that apply):

A. unusual usage activity that will probably not occur again

B. the start of a significant new trend in the usage of the product.

C. the wrong forecast formula being applied

D. the wrong forecast method being applied

E. price elasticity


ANSWER: A B C D

As stated by Jon Schreibfeder,

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"Today's competitive market requires accurate forecasts for the future demand of each product in inventory. We are constantly looking for ways to reduce the forecasting error (i.e., the difference between a forecast and the resulting usage). But these efforts are often frustrated by unusual activity imbedded in historic usage data" 8 .

Based on Jon’s reasoning, actual usage might deviate significantly from the forecast because of:

l unusual usage activity that will probably not occur again in the future.

l the start of a significant new trend in the usage of the product.

l the wrong forecast formula or method being applied to the item.

8 http://www.effectiveinventory.com/article46.html

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69, Which of the following represents a better way of forecasting?

A. identify items that might have experienced unusual usage activity and perform manual adjustment.

B. identify AND correct items that might have experienced unusual usage activity on the spot.

C. use computer simulation

D. use advanced forecast modeling (AFM) techniques


ANSWER: A

Jon believes that one better way of forecasting is “to identify, but not correct, items that might have experienced unusual usage activity. Buyers, planners, and/or salespeople review the list of items and determine whether unusual activity actually occurred, a significant new trend has begun, or the wrong forecasting method has been applied to the item. They can then manually adjust actual usage to reflect what usage would have been had no unusual activity occurred”.

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70, Sporadic usage items are items that are:

A. sold infrequently.

B. sold frequently.

C. sold seasonally.

D. sol AS IS.


ANSWER: A

Sporadic usage items are items that are sold infrequently. It is not easy to forecast the demand of such items, and the key point to make here is that you must carefully avoid using an incorrect forecast method or you will risk stocking the wrong quantity of the wrong item in the wrong location at the wrong time.

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71, Many companies use ABC Analysis to:

A. manage order levels.

B. perform short term forecast.

C. drive cycle counts.

D. perform long term forecast.


ANSWER: C

Many companies use ABC Analysis to manage inventory: they drive their cycle counts based on the ABC classifications, where items of high value (A items) are counted very frequently, and items of lower value are counted less frequently. In fact, the use of ABC Analysis is not restricted to cycle counting. In the case of demand management, you may spend more resources on managing the demand for A items (and spend less to take care of B and C items). If safety stock is a way of reacting to rising demands, you may, for example, have all “A”

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items get 4 weeks of safety stock, all “B” items get 3 weeks, and all “C” items get 2 weeks…etc.

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72, The primary drawbacks of the ABC approach are (choose all that apply):

A. it is not clear whether the three classes can cover the length of priority periods.

B. it is not clear whether % or decimal values should b used in the three classes.

C. it is not clear whether the three classes suffice for longer term estimation period.

D. it is not clear whether the three classes can capture the diversity and differences of the large number of SKUs many companies carry.


ANSWER: D

The ABC approach is believed to be flawed though. One primary drawback of this approach is that it is not clear whether the three classes can capture the diversity and differences of the large number of SKUs many companies carry.

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73, Which of the following statements correctly describe the “Bullwhip effect” (choose all that apply):

A. Demand variability increases as one moves up the supply chain away from the retail customer

B. Any small changes in consumer demand can result in large variations in orders placed upstream

C. The supply network can oscillate in very large swings

D. The supply network can oscillate in very small and frequent swings

E. Any small changes in consumer demand can result in large variations in orders placed downstream


ANSWER: A B C

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“Demand variability increases as one moves up the supply chain away from the retail customer, and small changes in consumer demand can result in large variations in orders placed upstream. Eventually, the network can oscillate in very large swings as each organization in the supply chain seeks to solve the problem from its own perspective” 9 .

9 http://www.quickmba.com/ops/bullwhip-effect/

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74, Bullwhipping effect is caused by variability and delays that are mostly the results of (choose all that apply):

A. Overreaction to backlogs

B. Shortage gaming

C. Demand forecast inaccuracies

D. Free return policies


ANSWER: A B C D

It is the variability coupled with time delays in the transmission of information up the supply chain and time delays in manufacturing and shipping goods down the supply chain that produce this kind of bullwhipping effect. The variability and delays are mostly the results of:

o Overreaction to backlogs

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o Poor communication along the supply chain

o Order batching produces larger orders which can produce more variance.

o Shortage gaming (customers order more than they need during a period of short supply)

o Demand forecast inaccuracies – in fact, independent multiple forecasts in the demand chain is believed to be the first cause of the bullwhip effect.

o Free return policies (this is especially true in the US where 30-day money back guarantee is the norm)

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75, Which of the following are NOT the basic determinants for the bullwhip effect (choose all that apply):

A. the quality of the forecast

B. the update frequency of the forecast

C. the reorder frequency

D. the reorder batch size

E. protective buying

F. speculative buying

G. None of the choices

ANSWER: G

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Lee, Padmanabhan and Whang (1997) identified the basic determinants for the bullwhip effect 10 :

o the quality of the forecast and its update frequency

o the reorder frequency and the reorder batch size

o the expectation of shortage, leading to protective buying

o the special price schemes, leading to speculative buying

10 http://www.stud.fernuni-hagen.de/q5153735/research/bullwhiptop.htm

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76, Sometimes a decision maker along the chain may order in higher quantities than he receives customer orders. The most typical rationales include (choose 3):

A. protection against stockout

B. lot size economics

C. speculative ordering

D. price optimization

E. labor agreement bargaining

ANSWER: A B C

To reduce the impact of the effect, better communication and cooperation among chain members is the key. If information can flow through the chain timely and accurately, bullwhip effect can be minimized.

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Sometimes a decision maker along the chain may order in higher quantities than he receives customer orders. The most typical rationales are:

o protection against stockout

o lot size economics

o speculative ordering

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77, The deliverables of S&OP are:

A. key long term decisions.

B. lower level long term decisions.

C. lower level short term decisions.

D. key short term decisions.

E. MRP schedules.

F. income statements.


ANSWER: A

“S&OP is a formal process that consists of a series of meetings, finishing with a high level meeting where key long term decisions are made. In these meetings, data from various areas of your business is discussed. The end goal is an agreement between various departments on the best course of action to achieve the optimal balance

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between supply and demand and to meet your profitability goals. It's a tool that helps you properly manage your business” 11 .

11 http://www.sopoverview.com/definition.htm

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78, Sales & Operations Planning is intended for achieving which of the following purposes (choose all that apply):

A. increasing teamwork between cross functional areas

B. facilitating the setting of targets

C. allowing progress against the Business Plan to be reviewed

D. putting your operational plan in line with your job shop flows

E. facilitating the setting of internal controls


ANSWER: A B C

Shorts for Sales & Operations Planning, S&OP is intended for helping companies to maximize customer satisfaction and meet profitability goals by achieving an optimal balance of demand and supply. In theory, S&OP can:

o increase teamwork between cross functional areas

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o put your operational plan in line with your Business Plan

o facilitate the setting of targets

o allow progress against the Business Plan to be reviewed

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79, Proper Sales & Operations Planning can contribute to which of the following results (choose all that apply):

A. Reduced lead times

B. Improved service levels

C. Reduced inventory management costs

D. Reduced obsolete inventory

E. Reduce expediting costs

F. Entire elimination of safety-stock


ANSWER: A B C D E

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As suggested by Adexa 12 , proper S&OP can contribute to the following results:

o Reduce lead times

o Profitably deploy inventory across the enterprise

o Synchronize material planning, capacity planning and allocation planning

o Improve service levels

o Reduce inventory management costs and obsolete inventory

o Reduce expediting costs

o Manage by/co products

o Optimize safety-stock and raw-material levels

12 http://www.adexa.com/solutions/sales.asp

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80, Which of the following correctly describe the order of the stages of S&OP?

A. Demand Review -> Supply Review -> Partnership Meeting -> Sales and Operations Planning Meeting

B. Supply Review -> Demand Review -> Partnership Meeting -> Sales and Operations Planning Meeting

C. Demand Review -> Sales and Operations Planning Meeting -> Supply Review -> Partnership Meeting

D. Sales and Operations Planning Meeting -> Demand Review -> Supply Review -> Partnership Meeting


ANSWER: A

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In the article “Sales and Operations Planning overview”, four stages of the S&OP process have been mentioned 13 :

o Demand Review - chaired by the Sales and Marketing Director, attended by Sales and Marketing Managers plus development engineers where relevant.

o Supply Review - chaired by the Logistics Director, and attended by manufacturing and planning personnel

o Partnership Meeting - bringing together the demand and supply reviews and often chaired by the Finance Director

o Sales and Operations Planning Meeting - full review and commitment to the plan, chaired by the Managing Director

13 http://www.bpic.co.uk/sop.htm

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81, During the S&OP process, Demand Review is often chaired by:

A. the Sales and Marketing Director

B. the Logistics Director

C. the Finance Director

D. the Managing Director


ANSWER: A

In the article “Sales and Operations Planning overview”, four stages of the S&OP process have been mentioned 14 :

o Demand Review - chaired by the Sales and Marketing Director, attended by Sales and Marketing Managers plus development engineers where relevant.

14 http://www.bpic.co.uk/sop.htm

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o Supply Review - chaired by the Logistics Director, and attended by manufacturing and planning personnel

o Partnership Meeting - bringing together the demand and supply reviews and often chaired by the Finance Director

o Sales and Operations Planning Meeting - full review and commitment to the plan, chaired by the Managing Director

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82, Rate this comment: “Short term forecasts are always more accurate than their long term counterparts”.

A. This is mostly true unless the short term forecasts use improper methods

B. This is always true

C. This is true only if the long term forecasts use improper methods


ANSWER: A

Short term forecasts are always more accurate than their long term counterparts. If the forecast time frame has to be long, you may consider the use of a time phased forecast process — have your forecast spread out by day or week or month. As recommended by Calvin (above), such a forecast could better support manufacturing and warehouse capacity planning, work force assignments, sales forecasting, and budgeting. However, to obtain an accurate time-phased forecast, careful modeling of day-of-week, trend, and seasonal effects and consideration of supplier constraints within the demand chain are required.

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83, In order to obtain an accurate time-phased forecast, which of the following are required (choose all that apply):

A. careful modeling of day-of-week, trend, and seasonal effects

B. consideration of supplier constraints within the demand chain

C. careful modeling of work flows

D. consideration of customer constraints within the supply chain


ANSWER: A B

Short term forecasts are always more accurate than their long term counterparts. If the forecast time frame has to be long, you may consider the use of a time phased forecast process — have your forecast spread out by day or week or month. As recommended by Calvin (above), such a forecast could better support manufacturing and warehouse capacity

139

Notes:

planning, work force assignments, sales forecasting, and budgeting. However, to obtain an accurate time-phased forecast, careful modeling of day-of-week, trend, and seasonal effects and consideration of supplier constraints within the demand chain are required.

140

Notes:

84, You may define and maintain forecasts:

A. for any item at any level of your BOM.

B. for certain items at the top 2 levels of your BOM.

C. for certain items at the top 3 levels of your BOM.

D. for only the top level items at any level of your BOM.


ANSWER: A

You may define and maintain forecasts for any item at any level of your BOM. You may forecast demand for products directly, or forecast product families and explode forecasts to individual products through your planning bills.

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Notes:

85, When are forecasts consumed (choose the BEST answer)?

A. each time your customers place order demand for the forecasted product.

B. each time your customers place order demand for the entire line of products.

C. each time you place manufacturing order for the promoted products.

D. each time you place manufacturing order for the competing products.


ANSWER: A

Forecasts are consumed each time your customers place order demand for the forecasted product.

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Notes:

86, Which of the following moving average techniques apply more weight on recent data (choose all that apply):



C. Weighted average


ANSWER: B C

The moving average is a way of calculating the average over a given time span. As the numbers change over time, the average reflects the change, but at a slower pace.

o Standard moving averages apply equal weight to the numbers. It adds the closing number for a number of time periods and divides this total by the number of periods. This results in the average over a specific time period.

o Exponential average puts more weight on recent data and less weight on past data. The exponential moving average applies a percentage of today's closing to yesterday's

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Notes:

moving average. The formula used is as follow: Moving Average = ((today's close)*x) + ((yesterday's moving average)*x) while x = the selected percentage

o Weighted average puts more weight on recent and less on past data as well. However, it works by multiplying each of the previous day's data by a predetermined weight.

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Notes:

87, Which of the following moving average methods adds the closing number for a number of time periods and divides this total by the number of periods?



C. Weighted average


ANSWER: A

The moving average is a way of calculating the average over a given time span. As the numbers change over time, the average reflects the change, but at a slower pace.

o Standard moving averages apply equal weight to the numbers. It adds the closing number for a number of time periods and divides this total by the number of periods. This results in the average over a specific time period.

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Notes:

o Exponential average puts more weight on recent data and less weight on past data. The exponential moving average applies a percentage of today's closing to yesterday's moving average. The formula used is as follow: Moving Average = ((today's close)*x) + ((yesterday's moving average)*x) while x = the selected percentage

o Weighted average puts more weight on recent and less on past data as well. However, it works by multiplying each of the previous day's data by a predetermined weight.

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Notes:

88, ABC Analysis is a method for determining:

A. priority

B. stock turns

C. inventory level

D. EOQ


ANSWER: A

To maintain accurate forecast for every item and to manage the demand for every item can be an exhaustive task – no one can afford to do good on everything. With ABC Analysis, you can produce a list of priority – you decide what is the most important item to take care of, and what items can receive less focus. To be precise, an ABC analysis determines the relative value of a group of inventory items based on your valuation criterion. "ABC" refers to the rankings you assign your items as a result of this analysis, where "A" items are ranked higher than "B" items, and so on.

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Notes:

89, Which of the following statements correctly describe ABC Analysis?

A. it determines the relative value of a group of inventory items based on your valuation criterion

B. it determines the absolute value of a group of inventory items based on your valuation criterion

C. it determines the relative composition of a group of inventory items based on your valuation criterion


ANSWER: A

To maintain accurate forecast for every item and to manage the demand for every item can be an exhaustive task – no one can afford to do good on everything. With ABC Analysis, you can produce a list of priority – you decide what is the most important item to take care of, and what items can receive less focus. To be precise, an ABC analysis determines the relative

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Notes:

value of a group of inventory items based on your valuation criterion. "ABC" refers to the rankings you assign your items as a result of this analysis, where "A" items are ranked higher than "B" items, and so on.

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Notes:

90, For many make-to-stock companies that require on-hand inventory, a reorder level that triggers purchase orders is being deployed. Such a reorder level approach is typically workable for (choose all that apply):

A. a very short time horizon

B. a very long time frame

C. make-to-order companies only

D. items with a flat BOM only

E. None of the above choices.

ANSWER: A

For many make-to-stock companies that require on-hand inventory, a reorder level that triggers purchase orders is being deployed. Such a reorder level is typically determined by the average usage of material, the lead time it takes to get in, and the amount of safety stock for covering unusual usage. Any combination of requirements that causes the inventory level to dip below the pre-determined reorder level will trigger a purchase order. This approach is typically workable for a very short time horizon (of less than several weeks), and is no good for longer time frame (as it tends to inflate the needed inventory estimation).

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Notes:

91, Why do you master schedule (choose all that apply):

A. to provide stability to materials plans

B. to manage the impact on key production resources

C. to ensure the proper execution of the production plan.

D. to ensure defect-free production


ANSWER: A B C

Why do you master schedule? Firstly, to provide stability to materials plans. Secondly, to manage the impact on key production resources. Thirdly, to ensure the proper execution of the production plan.

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Notes:

92, Year-end physical inventories (choose all that apply):

A. are tools for accounting purpose.

B. tend to help a lot for inventory accuracy.

C. tend to do very little for inventory accuracy.

D. should be eliminated entirely.


ANSWER: A

You should count your inventory on a continuous basis via cycle counting to maintain high levels of accuracy. Year-end physical inventories are tools for accounting purpose and can do very little for inventory accuracy.

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Notes:

93, When you send your counters out without giving them any quantity information on the item being counted, ________ occurs.

A. blind count

B. informed count

C. guess count

D. ineffective count

E. random count

F. None of the above choices.

ANSWER: A

A blind count occurs when you send your counters out without giving them any quantity information on the item being counted. They count the product and write down the quantity. You then compare the count quantities to on-hand quantities and investigate any variances. Such method is believed to be inferior because it produces lower first-pass accuracy rates and can be very time consuming.

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Notes:

94, Which of the following are the valid factors that are essential to maintaining inventory accuracy (choose all that apply):

A. Clear Process Definition

B. Procedure Documentation

C. Employee Training and Testing

D. Monitoring Processes for Compliance

E. Setting Standards

F. Tracking Accuracy

G. None of the above choices.

ANSWER: A B C D E F

Dave Piasecki in his article "Guide to Inventory Accuracy" lists the factors that are essential to maintaining inventory accuracy:

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Notes:

l Correct attitude (at both the individual level and the top management level)

l Clear Process Definition

l Procedure Documentation

l Employee Training and Testing

l Monitoring Processes for Compliance

l Setting Standards

l Tracking Accuracy

l Accountability

l Cycle counting

l Re-evaluate regularly

l Dedicate positions for managing inventory.

l Control employee turnover.

l Be prepared to dismiss or reassign employees.

l Don't be afraid to put Checks in place.

l Storage Areas - Crowded unorganized areas often become the "black holes" for missing product.

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Notes:

l Know your inventory system.

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Notes:

95, Which of the following are the major categories of bar codes (choose all that apply):

A. 1D

B. 2D

C. 3D

D. 4D

E. 5D


ANSWER: A B

Shorts for Automated Data Collection, ADC is also known as Automated Data Capture, Automated Identification AutoID, Automated Identification and Data Capture AIDC or just Barcoding. There are two major categories of bar codes:

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Notes:

l 1D - most popular nowadays, consist of different symbologies including UPC, Code 128, Code 39, Interleaved 2 of 5 ...etc. The symbology to use is usually dictated by supply chain partners through a standardized compliance label program.

l 2D - uses bar code symbologies such as UPS's MaxiCode, can store more data and require special scanners to read.

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Notes:

96, Talking about bar-code scanners, the device that acts like a small digital camera and takes a digital image of the bar code which is then decoded is known as:

A. BSA scanner

B. CCD scanner

C. RAD scanner

D. Biometric scanner

E. Keyboard-wedge scanner


ANSWER: B

Types of bar-code scanners include:

l Laser, which uses a laser beam that moves back and forth across the bar code reading the light and dark spaces, or Charged Coupled Device CCD scanner, which acts like a

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Notes:

small digital camera and take a digital image of the bar code which is then decoded. CCD scanners are cheaper but are limited to a shorter scan distance.

l Keyboard-wedge scanner, which connects between a computer keyboard and the computer and collect data to the computer as if the scanner were an input device.

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Notes:

97, Economic Order Quantity tends to ignore the actual demand pattern.

A. True

B. False

C. This must be considered on a case by case basis.

D. Actual demand pattern is not relevant anyway.


ANSWER: A

Economic Order Quantity EOQ ignores the actual demand pattern but is simple enough to implement. Period Order Quantity POQ is based on EOQ with more information being taken account into, but still cannot make use of all of the available data.

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Notes:

98, Period Order Quantity is superior to Economic Order because it can make use of all of the available data.

A. True

B. False

ANSWER: B

Economic Order Quantity EOQ ignores the actual demand pattern but is simple enough to implement. Period Order Quantity POQ is based on EOQ with more information being taken account into, but still cannot make use of all of the available data.

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Notes:

99, Which of the following methods works out an irregular interval between replenishment orders on the basis of what number of weeks will minimize unit cost (choose all that apply):

A. LUC

B. POQ

C. EOQ

D. ROQ

E. POQ


ANSWER: A

Whereas the Period Order Quantity POQ method computes a fixed number of weeks, the Least Unit Cost LUC method works out an irregular interval between replenishment orders on the basis of what number of weeks will minimize unit cost. LUC makes use of all of the available data and gives room for intuitive interpretation, but is more complicated than POQ and EOQ.

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Notes:

100, Which of the following theories states that the capacity of the supply chain system was governed by the capacity of it's weakest link?

A. Theory of Constraints

B. Economy of Scale

C. Theory of Competitive Advantages

D. Theory of Absolute Advantages


ANSWER: A

Based on the "Theory of Constraints", the capacity of the supply chain system was governed by the capacity of it's weakest link, that overproduction in other areas would simply produce unwanted inventory.

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Notes:

101, A typical capacity model used for capacity management should have which of the following principal categories of capacity use (choose 3):

A. productive

B. nonproductive

C. idle

D. max

E. half

F. min

G. None of the above choices.

ANSWER: A B C

A typical capacity model used for capacity management has the following principal categories of capacity use:

l productive

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Notes:

l nonproductive

l idle

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Notes:

102, Which of the following formulas is correct?

A. Rated capacity = productive capacity + nonproductive capacity

B. Rated capacity = productive capacity + idle capacity

C. Rated capacity = nonproductive capacity + idle capacity

D. Rated capacity = productive capacity + nonproductive capacity + idle capacity


ANSWER: D

Rated capacity = productive capacity (used for producing goods as well as in process and product improvement efforts) + nonproductive capacity (uses of capacity which do not produce goods, such as set-ups, maintenance, waste, and standby) + idle capacity (capacity that is not marketable or not in demand).

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Notes:

103, When drawing up tenders for the purchase of major equipment, which of the following information should be obtained (choose all that apply):

A. Installation costs B. Training costs C. Annual Operating costs D. Maintenance costs E. Disposal costs F. None of the choices.

ANSWER: A B C D E

When drawing up tenders for the purchase of major equipment, it is recommended that the following information be obtained as well as the capital cost:

l Installation costs: There may well be costs associated with building alterations special utility requirements i.e. water, electrical supply;

l Training costs: usually training is provided by the successful supplier as part of their overall package, however, there may well be instances when more specific training is required and can only be provided by the supplier over an extended period at an external location. Suppliers should be asked to provide a breakdown of any associated costs;

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Notes:

l Annual Operating costs i.e. running/consumable costs: An assessment of the anticipated annual workload through the equipment should be established and tenderers should be asked to provide a breakdown of associated costs;

l Maintenance costs over the proposed life of the equipment: These days because of technical advancement the figure usually used is between 3-5 years. This should include all service/replacement parts, which are required on an annual basis together with call-out charges for non-scheduled visits;

l Disposal costs.

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Notes:

104, Partnering is a technique for:

A. preventing disputes. B. lowering procurement cost. C. sharing development cost. D. sharing market information. E. None of the choices.

ANSWER: A

Often used as an alternative dispute resolution technique, partnering is a technique to prevent disputes from occurring. It involves purchasing organization and contractor management staff mutually developing a "plan for success," usually with the assistance of a neutral facilitator. The facilitator helps the parties establish a non-adversarial relationship, define mutual goals and identify the major obstacles to success for the project. Potential sources of conflict are identified, and the parties seek cooperative ways to resolve any disputes that may arise during contract performance. The process results in the parties developing a partnership charter, which serves as a roadmap for contract success. Many agencies have successfully used partnering on construction projects and are now beginning to apply these principles in the automated data processing/information resources management area.

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Notes:

105, Which of the following are factors that must be seriously considered regarding material disposal (choose all that apply):

A. environmental hazards

B. potential for creating liability

C. worker exposure concerns

D. storage safety requirements

E. handling and use requirements


ANSWER: A B C D E

Nowadays, Purchasing staff must took on the nonpurchasing responsibility of manifesting waste. Before purchasing personnel buy a hazardous material, they must think about the waste disposal costs it will create. Staff should be highly motivated to find workable alternatives to hazardous materials. Below are factors that must be seriously considered:

- environmental hazards

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Notes:

- potential for creating liability

- worker exposure concerns

- storage safety requirements

- handling and use requirements

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Notes:

106, In terms of supplier management, what does ESI stand for (Fill in the blank please):

___________________

ANSWER: Early Supplier Involvement

Now the trend is towards using fewer suppliers and maintaining closer relationships / cooperation with them. Emphasizing WIN WIN relationship with them is the key here. The terms below are all examples of such concept:

l Early Supplier Involvement (ESI) l Early Purchasing Involvement (EPI)

Never focus on price alone. You need good service and reliability as well as the willingness to co-operate. And this is what Supply Chain management is all about.

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Notes:

107, In terms of supplier management, what does EPI stand for (Fill in the blank please):

___________________

ANSWER: Early Purchasing Involvement

Now the trend is towards using fewer suppliers and maintaining closer relationships / cooperation with them. Emphasizing WIN WIN relationship with them is the key here. The terms below are all examples of such concept:

l Early Supplier Involvement (ESI) l Early Purchasing Involvement (EPI)

Never focus on price alone. You need good service and reliability as well as the willingness to co-operate. And this is what Supply Chain management is all about.

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Notes:

108, The concept of supply chain often involves:

A. backward integration.

B. forward integration.

C. horizontal integration.

D. no integration.


ANSWER: A


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Notes:

109, JIT is ______ based.

A. Push

B. Pull

C. Push + Pull


ANSWER: B

Push systems are triggered by interpretation of the expected demand and scheduling of supply to meet that demand. MRP does have elements of the push system built-in. Pull systems have replenishment triggered by the usage or depletion of stock. JIT is pull based.

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Notes:

110, Which of the following is an identification of a particular product that allows it to be tracked for inventory purposes?

A. MPR

B. MRP

C. SKU

D. SSU

E. SDU

F. SRK


ANSWER: C

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Notes:

Short for stockkeeping unit, SKU is an identification of a particular product that allows it to be tracked for inventory purposes. Typically, an SKU is alphanumeric and is associated with any purchasable item in a catalog. It may or may not be made visible to a customer, and is definitely not the same as a product model number from a manufacturer (although the model number could be used to form all or part of the SKU).

The SKU is established by the merchant or the manufacturer, not by any industry or trade association.

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Notes:

111, The SKU is established by:

A. the merchant or the manufacturer

B. the industry trade association

C. the government

D. ANSI


ANSWER: A

Short for stockkeeping unit, SKU is an identification of a particular product that allows it to be tracked for inventory purposes. Typically, an SKU is alphanumeric and is associated with any purchasable item in a catalog. It may or may not be made visible to a customer, and is definitely not the same as a product model number from a manufacturer (although the model number could be used to form all or part of the SKU).

The SKU is established by the merchant or the manufacturer, not by any industry or trade association.

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Notes:

112, What does RFP stand for (Fill in the blank please):

_______________

ANSWER: Request for Proposal

Pay particular attention to Request for Quote (RFQ), Request for Information (RFI) and Request for Proposal (RFP). If a RFP is used, once the evaluation is completed, the project is usually awarded to the vendor who presents the best value (not only in terms of price, but include other considerations too, such as Quality of the product or service provided, On-time & cost-effective delivery of products, Technology infrastructure of the supplier, Demographics, Financial solvency, Experience, Environmentally conscious policies …etc).

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Notes:

113, All of the Incoterms are expressed as:

A. three-letter codes B. three-alphanumeric codes C. four-letter codes D. four-alphanumeric codes E. None of the choices.

ANSWER: A

Central to the concept of the Incoterms is the understanding that at any given point where either risk, responsibility, liability or costs terminate from the seller's perspective, so they must instantly initiate from the buyer's perspective. All of the Incoterms are expressed as three- letter codes for facilitating the use of EDI.

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Notes:

114, Under EXW arrangement, who undertakes to take responsibility for the cargo from the production factory?

A. the seller

B. the buyer

C. the trading agent

D. no body


ANSWER: B

EXW - the buyer undertakes to take responsibility for the cargo from the seller’s factory. Once the seller has made the goods available for collection, the seller’s physical obligations under the contract have been completely met.

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Notes:

115, Packaging serves the functions of (choose all that apply):

A. containment B. protection C. apportionment D. unitization E. None of the choices.

ANSWER: A B C D

Packaging serves the functions of:

l containment

l protection

l apportionment

l unitization

l convenience

l communication (such as the use of UPC Universal Product Code)

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Notes:

116, Which of the following extends DRP-I by including the planning of key enterprise resources?

A. DRP-II B. MRP-II C. LDR-II D. CDR-II E. None of the choices.

ANSWER: A

Distribution Resource Planning (DRP-II) extends DRP-I by including the planning of key enterprise resources like warehouse spaces, manpower, transport capacity and financials. Simply put, a DRP-II system can translate demand forecasts for each SKU at each warehouse/distribution center into a proper time phased replenishment plan.

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Notes:

117, Which of the following are the valid types of distribution mode in a production environment where goods of different nature are produced and marketed (choose all that apply):

A. Intensive distribution B. Selective distribution C. Exclusive distribution D. Evaluative distribution E. None of the choices.

ANSWER: A B C

Through effective logistical measures one may achieve market coverage objectives to the fullest extent by implementing proper distribution tactics. Types of distributions can include:

l Intensive distribution

l Selective distribution

l Exclusive distribution

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Notes:

118, Which of the following supply chain modeling approaches provides normative models for strategic decisions by focusing on the design aspect of the supply chain?

A. Network Design B. Rough Cut C. Simulation based D. Risk based E. None of the choices.

ANSWER: A

There are three major kinds of supply chain modeling approaches. They are Network Design methods, Rough Cut methods, and simulation based methods. Network design methods provide normative models for strategic decisions by focusing on the design aspect of the supply chain. Rough cut methods which emphasize the development of inventory control policies can provide guiding policies for the various operational decisions. Simulation methods allow a comprehensive supply chain model to be analyzed with both strategic and operational elements considered.

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Notes:

119, Which of the following supply chain modeling approaches primarily emphasizes the development of inventory control policies?

A. Network Design B. Rough Cut C. Simulation based D. Risk based E. None of the choices.

ANSWER: B


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Notes:

120, Decisions involved in SCM can generally be classified as:

A. either tactical or operational B. either regressive or proactive C. either directional or unidirectional D. either strategic or operational E. None of the choices.

ANSWER: D

Decisions involved in SCM can generally be classified as either strategic or operational, and may be further grouped into four major areas, including location decisions, production decisions, inventory decisions, and transportation decisions.

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Notes:

121, Decisions involved in SCM can generally be grouped into which 4 major areas (choose 4):

A. location decisions B. production decisions C. inventory decisions D. transportation decisions E. human decisions F. training decisions

ANSWER: A B C D

Decisions involved in SCM can generally be classified as either strategic or operational, and may be further grouped into four major areas, including location decisions, production decisions, inventory decisions, and transportation decisions.

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Notes:

122, Which of the following correctly describes simulation methods for analyzing supply chain?

A. It allows a comprehensive supply chain model to be analyzed with primarily strategic elements considered.

B. It allows a comprehensive supply chain model to be analyzed with primarily operational elements considered and fine tuned.

C. It is a MUST for SCRM. D. It allows a comprehensive supply chain model to be analyzed with both strategic and

operational elements considered. E. None of the choices.

ANSWER: D


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Notes:

123, Which of the following disciplines aims at reducing dependency and promoting synergy among supply chain partners?

A. SCRM B. SCCM C. SCEM D. SCTM E. None of the choices.

ANSWER: A

Supply Chain Risk Management (SCRM) aims at reducing dependency and promoting synergy among supply chain partners. It takes a pro-active approach to ensure effective management of all potential risks throughout the supply chain, with greater focus placed on the various unpredictable factors along the chain.

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Notes:

124, Which of the following best describes SCRM?

A. It has to be proactive B. It has to be reactive C. It must be quarterly budgeted D. It must be reviewed at the company policy level E. None of the choices.

ANSWER: A

Supply Chain Risk Management (SCRM) aims at reducing dependency and promoting synergy among supply chain partners. It takes a pro-active approach to ensure effective management of all potential risks throughout the supply chain, with greater focus placed on the various unpredictable factors along the chain.

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Notes:

125, Talking about GSCM, the valid types of GREEN are (choose all that apply):

A. stock green B. scientific green C. government green D. customer green E. None of the choices.

ANSWER: B C D

The concept of Green Supply Chain Management (GSCM) covers every stage in manufacturing, from product design to recycle, or from cradle to grave. The three types of GREEN are scientific green, government green, and customer green.

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Notes:

Additional Practice Review Questions

The CSCP exam is highly comprehensive. We accordingly create this special module with more questions for your in-depth practice and review.

Answers to the review questions were defined through referencing the following reference textbooks:

Global Logistics Management (2 rd) by Kent Gourdin (2006)

Operations Management for Competitive Advantage (11 ed) by Chase, Jacobs and Aquilano (2006)

Fundamentals of Logistics Management by Grant, Lambert, Stock and Ellram (2006)

Supply Chain Management: Strategy, Planning & Operation (3 rd) by Chopra and Meindl (2007)

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Notes:

Additional Review Questions Module 1:

Question 1:

A large percentage of a railroad’s total costs are:

Possible Choices:

fixed in the short run

fixed in the long run but not so in the short run

fixed in the short run and in the long run

None of the choices.

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Notes:

Answer: fixed in the short run

Reference page number: GOURDIN’S “GLOBAL LOGISTICS MANAGEMENT (2 ED)”, 2006 - 89

196

Notes:

Question 2:

Rail companies are technically:

Possible Choices:

monopolistics

not monopolistics

highly competitive.


197

Notes:

Answer: monopolistics


198

Notes:

Question 3:

Road haulage offers MOST flexibility to shippers.

Possible Choices:

True

False

True only in the US

True only outside of the US

199

Notes:

Answer: True


200

Notes:

Question 4:

Pipelines are ALWAYS the MOST efficient mode of transport for certain commodities.

Possible Choices:

True

False

True only in the US

True only outside of the US

201

Notes:

Answer: True


202

Notes:

Question 5:

Air freight can SOMETIMES be way more cost effective than other shipment modes.

Possible Choices:

True

False

True only when insurance coverage is not a concern.

203

Notes:

Answer: True


204

Notes:

Question 6:

Commercial water transport would occur only in inland waterways.

Possible Choices:

True

False

205

Notes:

Answer: True


206

Notes:

Question 7:

Deregulation takes place MOSTLY for domestic transport only.

Possible Choices:

True

Not so true in the US

Not so true in the UK

False

207

Notes:

Answer: True


208

Notes:

Question 8:

Which of the following involves placing US customs in major seaports worldwide?

Possible Choices:

CSI

AIS

ISPS


209

Notes:

Answer: CSI


210

Notes:

Question 9:

MOST warehouses serve as points of gathering.

Possible Choices:

True

False

211

Notes:

Answer: False


212

Notes:

Question 10:

Centralizing warehouses can cut inventory holding costs in general.

Possible Choices:

True

True only for expensive products

False

213

Notes:

Answer: True


214

Notes:

Question 11:

Which of the following are the valid kinds of facility location techniques (choose all that apply):

Possible Choices:

optimization

simulation

heuristics


215

Notes:

Answer: optimization, simulation, heuristics


216

Notes:

Question 12:

Private warehousing has the risk of sub-optimization.

Possible Choices:

True

False

217

Notes:

Answer: True


218

Notes:

Question 13:

The basic kinds of packages are (choose all that apply):

Possible Choices:

consumer package

industrial package

liquid package

solid package


219

Notes:

Answer: consumer package, industrial package


220

Notes:

Question 14:

The main kinds of bar code scanners are (choose all that apply):

Possible Choices:

automatic

handheld

laser

radio


221

Notes:

Answer: automatic, handheld


222

Notes:

Question 15:

Inbound logistics is often being referred to as:

Possible Choices:

materials management

source management

procurement management

source package management


223

Notes:

Answer: materials management


224

Notes:

Question 16:

Inventory concerns are virtually the SAME for raw materials and for finished goods.

Possible Choices:

True

False

True only without a centralized warehouse

True only with a centralized warehouse


225

Notes:

Answer: True


226

Notes:

Question 17:

Concerning shipping, cost of service pricing:

Possible Choices:

is usually difficult to implement

is usually very easy to implement

is highly regulated


227

Notes:

Answer: is usually difficult to implement


228

Notes:

Question 18:

DRP begins with:

Possible Choices:

supplier demand

customer demand

warehouse demand


229

Notes:

Answer: customer demand


230

Notes:

Question 19:

DRP is a _________ approach to demand satisfaction.

Possible Choices:

push

pull

231

Notes:

Answer: push


232

Notes:

Question 20:

Inventory that no one wants is:

Possible Choices:

speculative stock

seasonal stock

stop stock

halt stock

dead stock

233

Notes:

Answer: dead stock


234

Notes:

Question 21:

Which of the following is NOT an example of inventory holding costs?

Possible Choices:

theft

insurance

handling

taxes


235

Notes:

Answer: None of the choices.


236

Notes:

Question 22:

With new technologies, demand can be made known with close to absolute certainty.

Possible Choices:

True

False

237

Notes:

Answer: False


238

Notes:

Question 23:

Logistics outsourcing is ONLY common in manufacturing businesses.

Possible Choices:

True

False

239

Notes:

Answer: False


240

Notes:

Question 24:

Foreign trade zones can ease impact of:

Possible Choices:

market fluctuations

demand uncertainty

customs regulations


241

Notes:

Answer: customs regulations


242

Notes:

Question 25:

Which of the following correctly describe Center Led Procurement?

Possible Choices:

it covers different purchasing models

it is a US only model

it is a EU only model

it emphasizes decentralization.


243

Notes:

Answer: it covers different purchasing models


244

Notes:

Question 26:

Multidimensional barcode:

Possible Choices:

is replaced by RFID.

requires legal approval prior to use.

is never popular in the US

offers additional capacity.


Answer: offers additional capacity


245

Notes:

Question 27:

Which of the following is a standard EDI language?

Possible Choices:

EDIFACT

EDICODE

EDIXML


246

Notes:

Answer: EDIFACT


247

Notes:

Question 28:

The biggest constraint affecting EDI use is:

Possible Choices:

lack of standard

lack of security

lack of support


248

Notes:

Answer: lack of standard


249

Notes:

Question 29:

Centralization of warehouse may not work for country specific products.

Possible Choices:

True

False

250

Notes:

Answer: True


251

Notes:

Question 30:

In terms of transportation pricing, value-of-service aims at setting:

Possible Choices:

upper limit

minimum charges

fair pricing

average pricing


252

Notes:

Answer: upper limit


253

Notes:


Question 1:

When conducting aggregate planning, tradeoffs that need to be dealt with would include (choose all that apply):

Possible Choices:

capacity

inventory

backlog

lost sales


254

Notes:

Answer: capacity, inventory, backlog, lost sales

Reference page number: CHOPRA & MEINDL’S “SUPPLY CHAIN MANAGEMENT: STRATEGY, PLANNING & OPERATION (3 RD)”, 2007 - 221

255

Notes:

Question 2:

When conducting aggregate planning, a chase strategy would mean:

Possible Choices:

using utilization as the lever

using capacity as the lever

using demand as the lever

using product characteristics as the lever


256

Notes:

Answer: using capacity as the lever


257

Notes:

Question 3:

When conducting aggregate planning, a capacity strategy would mean:

Possible Choices:



using inventory as the lever

using product characteristics as the lever


258

Notes:

Answer: using utilization as the lever


259

Notes:

Question 4:

When conducting aggregate planning, a level strategy would mean:

Possible Choices:



using inventory as the lever

using demand characteristics as the lever


260

Notes:

Answer: using inventory as the lever


261

Notes:

Question 5:

Which of the following are the valid goals of aggregate planning (choose all that apply):

Possible Choices:

maximizing profits

meeting demand

maintaining customer loyalty

maintaining supplier loyalty


262

Notes:

Answer: maximizing profits, meeting demand


263

Notes:

Question 6:

Aggregate planning is particularly important when (choose all that apply):

Possible Choices:

capacity is limited

lead times are long

capacity is not limited

lead times are short


264

Notes:

Answer: capacity is limited, lead times are long


265

Notes:

Question 7:

You may conclude that demand forecasts form the basis of all supply chain planning.

Possible Choices:

True

False

266

Notes:

Answer: True


267

Notes:

Question 8:

Long term forecasts are usually less accurate than short term forecasts.

Possible Choices:

True

True only for tangible goods

True only for consumer goods

False


268

Notes:

Answer: True

Reference page number: Chopra & Meindl’s “Supply Chain Management: Strategy, Planning & Operation (3 rd)”, 2007 - 188

269

Notes:

Question 9:

Aggregate forecasts are usually less accurate than disaggregate forecasts.

Possible Choices:

True



False


270

Notes:

Answer: False


271

Notes:

Question 10:

Qualitative forecasts are usually less subjective than quantitative forecasts.

Possible Choices:

True



False


272

Notes:

Answer: False


273

Notes:

Question 11:

Causal forecast assumes the existence of:

Possible Choices:

correlations.

product maturity.

supply leak


274

Notes:

Answer: correlations.


275

Notes:

Question 12:

Qualitative forecast would be appropriate when:

Possible Choices:

you have sufficient historical data

you do not have much historical data

you have very tight budget


276

Notes:

Answer: you do not have much historical data


277

Notes:

Question 13:

Demand forecasting focuses on predicting:

Possible Choices:

the systematic component of demand

the non-systematic component of demand

the systematic component of supply

the non-systematic component of supply


278

Notes:

Answer: the systematic component of demand


279

Notes:

Question 14:

Deseasonalized demand represents:

Possible Choices:

demand with seasonal fluctuations

biased demand.

demand without seasonal fluctuations


280

Notes:

Answer: demand without seasonal fluctuations


281

Notes:

Question 15:

Adaptive forecasting would require:

Possible Choices:

computer modeling

seasonalized demand

visual demand representation

updates after each observation


282

Notes:

Answer: updates after each observation


283

Notes:

Question 16:

The Holt’s model assumes:

Possible Choices:

seasonality

no seasonality

no trend

pure randomness


284

Notes:

Answer: no seasonality


285

Notes:

Question 17:

Forecast errors could increase when product life cycles are:

Possible Choices:

known

short

long


286

Notes:

Answer: short


287

Notes:

Question 18:

Demand pooling may mitigate forecast risk.

Possible Choices:

True

False

288

Notes:

Answer: True


289

Notes:

Question 19:

Time series methods are either:

Possible Choices:

static or adaptive

static or dynamic

static or random


290

Notes:

Answer: static or adaptive


291

Notes:

Question 20:

The Winter’s model for forecasting is:

Possible Choices:

largely obsolete

seasonality corrected

pure random

never reliable


292

Notes:

Answer: seasonality corrected


293

Notes:

Question 21:

Supply chain network design should cover (choose all that apply):

Possible Choices:

facility role

facility location

capacity location

market and supply allocation


294

Notes:

Answer: facility role, facility location, capacity location, market and supply allocation


295

Notes:

Question 22:

Market and supply allocation may affect (choose all that apply):

Possible Choices:

production

inventory

transportation

customer demand


296

Notes:

Answer: production, inventory, transportation


297

Notes:

Question 23:

Supply chain network design should consider which of the following macroeconomic factors (choose all that apply):

Possible Choices:

company culture

tax

tariff

exchange rate


298

Notes:

Answer: tax, tariff, exchange rate


299

Notes:

Question 24:

Exchange rate risks may be best handled through:

Possible Choices:

varying demand

varying production schedule

varying capacity

using financial instruments


300

Notes:

Answer: using financial instruments


301

Notes:

Question 25:

Which of the following would lead to competitors locating close to each other?

Possible Choices:

negative externalities

positive externalities

negative internalities

positive internalities


302

Notes:

Answer: positive externalities


303

Notes:

Question 26:

Inventory costs would increase when the number of facilities increases.

Possible Choices:

True

False

304

Notes:

Answer: True


305

Notes:

Question 27:

Quality of life could be an important issue related to productivity in a facility location.

Possible Choices:

True

False

True only for centralized SCM

True only for decentralized SCM

306

Notes:

Answer: True


307

Notes:

Question 28:

Tax incentive should NOT be a major factor to consider when choosing facility location.

Possible Choices:

True

False

308

Notes:

Answer: False


309

Notes:

Question 29:

Gravity location models emphasize:

Possible Choices:

control cost minimization

transport cost minimization

setup cost minimization

admin cost minimization

310

Notes:

Answer: transport cost minimization


311

Notes:

Question 30:

Relevant infrastructure elements to consider when locating a facility may include (choose all that apply):

Possible Choices:

rail service

congestion

utilities

road access


Answer: rail service, congestion, utilities, road access


312

Notes:


Question 1:

Materials Management duties include (choose all that apply):

Possible Choices:

procurement

inventory control

receiving

warehousing


313

Notes:

Answer: procurement, inventory control, receiving, warehousing

Reference page number: “FUNDAMENTALS OF LOGISTICS MANAGEMENT”, 2006 - 174

314

Notes:

Question 2:

With JIT delivery you may greatly reduce the need for:

Possible Choices:

scheduling

master scheduling

BOM development

inbound warehousing


315

Notes:

Answer: inbound warehousing


316

Notes:

Question 3:

Which of the following is a primary duty of the material disposal function?

Possible Choices:

disposal classification

inbound logistics

master scheduling

disposal forecasting


317

Notes:

Answer: disposal classification


318

Notes:

Question 4:

5-S is a concept for:

Possible Choices:

TQM

JIT

Lean

SCM


319

Notes:

Answer: TQM


320

Notes:

Question 5:

Service levels of the materials management function may be measured by (choose all that apply):

Possible Choices:

order cycle time

order fill rate

production delay

stock out


321

Notes:

Answer: order cycle time, order fill rate, production delay, stock out


322

Notes:

Question 6:

A high level of inventory with a uniform production schedule would be better than a fluctuating schedule with less inventory.

Possible Choices:

True

False

323

Notes:

Answer: True


324

Notes:

Question 7:

Uneven demand may be coped with through:

Possible Choices:

leveling the production schedule

leveling the production facilities

leveling the production capacities


325

Notes:

Answer: leveling the production schedule


326

Notes:

Question 8:

Which of the following is a drawback of MRP I in terms of material cost?

Possible Choices:

it cannot really optimize material acquisition cost

it can double or triple the material acquisition cost

there is no drawback in this regard


327

Notes:

Answer: it cannot really optimize material acquisition cost


328

Notes:

Question 9:

Which of the following is a drawback of MRP I in terms of transportation cost?

Possible Choices:

it cannot really optimize material transportation cost

it can double or triple the material transportation cost

there is no drawback in this regard


329

Notes:

Answer: it cannot really optimize material transportation cost


330

Notes:

Question 10:

MRP II would allow for:

Possible Choices:

lower inventory turnover

even inventory turnover

uneven inventory turnover

higher inventory turnover


331

Notes:

Answer: higher inventory turnover


332

Notes:

Question 11:

MRP II can reduce the need of expediting shipments.

Possible Choices:

True

False

True only when lead time is real long

True only when lead time is real short


333

Notes:

Answer: True


334

Notes:

Question 12:

Gravity flow storage racks are often used for storing:

Possible Choices:

high demand items

low demand items

custom made items

small parts

large parts

335

Notes:

Answer: high demand items


336

Notes:

Question 13:

Modular storage drawers are often used for storing:

Possible Choices:

high demand items

low demand items

custom made items

small parts

large parts

337

Notes:

Answer: small parts


338

Notes:

Question 14:

Using AS/RS can have which of the following benefits (choose all that apply):

Possible Choices:

reduced labor cost

reduced floor space

increased inventory accuracy

reduced material cost


339

Notes:

Answer: reduced labor cost, reduced floor space, increased inventory accuracy


340

Notes:

Question 15:

A carousel is a form of:

Possible Choices:

AS/RS

RFID

Bluetooth

ERP

DRP-II


341

Notes:

Answer: AS/RS


342

Notes:

Question 16:

AGVSs are typically driverless.

Possible Choices:

True

False

343

Notes:

Answer: True


344

Notes:

Question 17:

Reverse logistics is sometimes being referred to as:

Possible Choices:

red logistics

green logistics

blue logistics


345

Notes:

Answer: green logistics


346

Notes:

End of Module

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NEW CSCP module REVIEW Q 2011