APICS Supply Chain & Strategy 4 — Questions and Answers
Question 1: A company decides to outsource its warehousing operations to a third-party logistics (3PL) provider. The primary strategic rationale is typically to:
- Eliminate all logistics costs
- Focus on core competencies while leveraging the 3PL's expertise and scale (Correct answer)
- Avoid compliance with transportation regulations
- Reduce the number of SKUs managed
Correct answer: Focus on core competencies while leveraging the 3PL's expertise and scale
Outsourcing to 3PLs allows companies to concentrate on their core business while benefiting from the provider's specialized expertise, technology, and economies of scale.
Question 2: Which supply chain strategy uses real-time point-of-sale data to trigger replenishment signals directly from the retailer to the supplier?
- Economic Order Quantity (EOQ)
- Continuous Replenishment Program (CRP) (Correct answer)
- Safety stock optimization
- Push-based distribution
Correct answer: Continuous Replenishment Program (CRP)
Continuous Replenishment Programs use real-time POS data to automatically trigger supplier replenishment, keeping shelves stocked with minimal inventory.
Question 3: In supply chain risk management, 'supply chain resilience' is best defined as:
- The ability to never experience supply disruptions
- The capacity to prepare for, adapt to, withstand, and recover rapidly from disruptions (Correct answer)
- Having excess inventory to buffer against all risks
- Sole-sourcing from the most reliable suppliers
Correct answer: The capacity to prepare for, adapt to, withstand, and recover rapidly from disruptions
Supply chain resilience is the ability to anticipate, prepare for, respond to, and adapt to incremental change and sudden disruptions in order to survive and prosper.
Question 4: The 'cash-to-cash cycle time' metric measures:
- Time from customer order to cash receipt
- Time from paying for materials to collecting payment from customers (Correct answer)
- Days of inventory on hand
- Supplier payment terms in days
Correct answer: Time from paying for materials to collecting payment from customers
Cash-to-cash cycle time measures how long a company's cash is tied up in operations, from paying suppliers to collecting from customers (DIO + DSO - DPO).
Question 5: When a company implements a 'green supply chain' strategy, a primary operational focus is:
- Sourcing only from domestic suppliers
- Minimizing environmental impact across the full supply chain lifecycle (Correct answer)
- Eliminating all non-recyclable packaging
- Reducing supply chain headcount
Correct answer: Minimizing environmental impact across the full supply chain lifecycle
Green supply chain management integrates environmental thinking into supply chain management, addressing design, sourcing, production, delivery, and end-of-life product management.
Question 6: Which approach to supply chain network design minimizes total logistics costs while meeting customer service requirements?
- Maximizing the number of distribution centers
- Optimizing the number, location, and size of facilities based on cost-service trade-off analysis (Correct answer)
- Centralizing all distribution through a single national DC
- Locating warehouses near the company headquarters
Correct answer: Optimizing the number, location, and size of facilities based on cost-service trade-off analysis
Network design optimization analyzes cost-service trade-offs to determine the ideal facility footprint that meets service requirements at the lowest total cost.
Question 7: A company experiencing high demand variability for a product should primarily consider increasing which supply chain lever?
- Production batch sizes
- Supply chain flexibility and responsiveness (Correct answer)
- Supplier payment terms
- Product standardization
Correct answer: Supply chain flexibility and responsiveness
High demand variability requires supply chain flexibility — the ability to quickly adjust capacity, sourcing, and fulfillment to match unpredictable demand patterns.
APICS Supply Chain & Strategy 4
A company decides to outsource its warehousing operations to a third-party logistics (3PL) provider.
The primary strategic rationale is typically to: