Certified Supply Chain Professional CSCP Practice Certified Supply Chain Professional (CSCP) Supply Chain Design Strategy 1 — Questions and Answers
Question 1: A company selling seasonal fashion items wants to minimize the risk of overstock and stockouts. Which supply chain design strategy best addresses this challenge?
- Lean supply chain with fixed production schedules
- Agile supply chain with flexible, demand-driven production (Correct answer)
- Fully integrated vertical supply chain
- Low-cost country sourcing with bulk ordering
Correct answer: Agile supply chain with flexible, demand-driven production
An agile supply chain is designed for responsiveness and flexibility, enabling rapid adjustments to volatile and unpredictable demand patterns — ideal for seasonal fashion where trends shift quickly.
Question 2: When designing a global supply chain network, which of the following best describes a 'total cost of ownership' (TCO) approach?
- Selecting suppliers based solely on unit purchase price
- Evaluating all direct and indirect costs over the full lifecycle of a sourcing decision (Correct answer)
- Minimizing transportation spend by consolidating all shipments to one carrier
- Focusing exclusively on labor cost differences between countries
Correct answer: Evaluating all direct and indirect costs over the full lifecycle of a sourcing decision
TCO accounts for all costs associated with a sourcing or network decision — including quality, logistics, risk, duties, and carrying costs — rather than focusing narrowly on purchase price.
Question 3: A manufacturer decides to place a distribution center closer to its largest customer cluster to reduce lead times. This decision is primarily driven by which supply chain design principle?
- Risk pooling
- Demand-side proximity (Correct answer)
- Postponement
- Vertical integration
Correct answer: Demand-side proximity
Locating facilities near key customers (demand-side proximity) reduces transportation time and cost while improving service levels, which is a core network design principle.
Question 4: Which supply chain design concept reduces safety stock requirements by combining inventory for multiple locations into a single centralized pool?
- Cross-docking
- Risk pooling (Correct answer)
- Make-to-order production
- Milk-run routing
Correct answer: Risk pooling
Risk pooling leverages statistical aggregation: when demand variability from multiple locations is combined, the coefficient of variation decreases, reducing the total safety stock needed.
Question 5: In supply chain network design, 'decoupling point' refers to:
- The moment a shipment crosses an international border
- The point in the supply chain where product flow switches from push to pull (Correct answer)
- The boundary between a company's internal and outsourced operations
- The stage at which quality inspection separates conforming from non-conforming goods
Correct answer: The point in the supply chain where product flow switches from push to pull
The decoupling point (also called the order penetration point) is where customer orders enter the supply chain, separating upstream push-based production from downstream pull-based fulfillment.
Question 6: A company is evaluating whether to source a critical component from a single supplier or multiple suppliers. The primary supply chain design trade-off in this decision is:
- Transportation mode selection versus inventory carrying cost
- Price leverage and simplicity versus supply disruption risk (Correct answer)
- Lead time reduction versus order frequency
- Warehouse automation versus manual picking accuracy
Correct answer: Price leverage and simplicity versus supply disruption risk
Single sourcing offers lower prices and simpler coordination but concentrates risk; multi-sourcing diversifies risk at the cost of reduced volume leverage and added complexity — a core supply chain design trade-off.
Certified Supply Chain Professional CSCP Practice Certified Supply Chain Professional (CSCP) Supply Chain Design Strategy 1
A company selling seasonal fashion items wants to minimize the risk of overstock and stockouts.
Which supply chain design strategy best addresses this challenge?