CSM CSM Operations & Supply Chain Management 1 — Questions and Answers
Question 1: What is the primary focus of lean management?
- Increasing headcount to maximize production output
- Eliminating waste and creating more value for customers with fewer resources (Correct answer)
- Standardizing all processes across global operations
- Reducing product variety to lower manufacturing complexity
Correct answer: Eliminating waste and creating more value for customers with fewer resources
Lean management focuses on identifying and eliminating non-value-adding activities (waste) throughout a process to deliver maximum value to customers efficiently.
Question 2: Which supply chain metric measures the average number of days a company takes to convert inventory into revenue?
- Gross margin return on investment
- Days inventory outstanding (DIO) (Correct answer)
- Perfect order rate
- Supplier on-time delivery rate
Correct answer: Days inventory outstanding (DIO)
Days Inventory Outstanding (DIO) measures how many days on average a company holds inventory before it is sold, indicating inventory management efficiency.
Question 3: The 'just-in-time' (JIT) inventory system is designed to:
- Build large safety stocks to prevent supply disruptions
- Receive goods only as they are needed in the production process to minimize inventory costs (Correct answer)
- Automate purchasing decisions using artificial intelligence
- Synchronize production schedules across multiple international factories
Correct answer: Receive goods only as they are needed in the production process to minimize inventory costs
JIT reduces inventory holding costs and waste by scheduling the arrival of materials and components precisely when they are needed in the production process.
Question 4: What does 'vertical integration' mean in supply chain strategy?
- Coordinating multiple product lines within a single business unit
- A company owning and controlling multiple stages of its supply chain (Correct answer)
- Organizing suppliers by quality tier from top to bottom
- Implementing digital systems that connect all supply chain partners
Correct answer: A company owning and controlling multiple stages of its supply chain
Vertical integration occurs when a company acquires or develops capabilities across different stages of its supply chain, such as owning suppliers or distribution channels.
Question 5: In operations management, 'process capability' refers to:
- The maximum number of employees a process can support
- The ability of a process to produce output within specified quality limits consistently (Correct answer)
- The speed at which a manufacturing line can be reconfigured for new products
- Total investment required to upgrade existing production equipment
Correct answer: The ability of a process to produce output within specified quality limits consistently
Process capability measures how well a process can produce outputs that meet specifications, typically expressed as Cp or Cpk indices comparing variation to tolerance limits.
Question 6: Which approach to quality improvement focuses on reducing variation and defects to 3.4 defects per million opportunities?
- Total Quality Management (TQM)
- Kaizen
- Six Sigma (Correct answer)
- ISO 9001 certification
Correct answer: Six Sigma
Six Sigma uses statistical methods and a structured DMAIC or DMADV methodology to reduce process variation to achieve near-perfect quality at 3.4 defects per million opportunities.
CSM CSM Operations & Supply Chain Management 1
What is the primary focus of lean management?