CWLP Supply Chain Operations & Optimization 4 — Questions and Answers
Question 1: Which supply chain design strategy holds minimal finished goods inventory and instead postpones final product configuration until a customer order is received?
- Make-to-stock (MTS)
- Postponement (delayed differentiation) (Correct answer)
- Engineer-to-order (ETO)
- Vendor-managed inventory (VMI)
Correct answer: Postponement (delayed differentiation)
Postponement defers value-added activities until demand is known, reducing finished goods variety and inventory risk.
Question 2: A supply chain's 'cash-to-cash cycle time' is calculated as:
- Days Sales Outstanding (DSO) − Days Payable Outstanding (DPO)
- Days Inventory Outstanding (DIO) + DSO − DPO (Correct answer)
- DPO + DIO − DSO
- DSO + DPO − DIO
Correct answer: Days Inventory Outstanding (DIO) + DSO − DPO
Cash-to-cash = DIO + DSO − DPO; it measures how many days cash is tied up in the operating cycle.
Question 3: Demand sensing uses which type of data to generate short-term forecasts more accurately than traditional statistical models?
- Annual sales budgets
- Point-of-sale and real-time consumption signals (Correct answer)
- Supplier lead time averages
- Historical shipment logs
Correct answer: Point-of-sale and real-time consumption signals
Demand sensing uses granular, real-time POS data and other consumption signals to detect actual demand patterns as they emerge.
Question 4: When a manufacturer allows a retailer to trigger replenishment orders automatically based on agreed inventory levels, this is known as:
- Consignment inventory
- Vendor-managed inventory (VMI) (Correct answer)
- Cross-docking
- Collaborative forecasting
Correct answer: Vendor-managed inventory (VMI)
In VMI, the supplier takes responsibility for monitoring and replenishing the customer's stock within agreed parameters.
Question 5: Which lean principle focuses on producing only what is needed, when it is needed, and in the amount needed?
- Kaizen
- Poka-yoke
- Just-in-Time (JIT) (Correct answer)
- 5S methodology
Correct answer: Just-in-Time (JIT)
JIT aims to eliminate waste by synchronizing production and delivery precisely with actual demand.
Question 6: In the SCOR (Supply Chain Operations Reference) model, 'Source' refers to:
- Finding new customers for products
- Procuring goods and services to meet planned or actual demand (Correct answer)
- Manufacturing finished products
- Delivering orders to customers
Correct answer: Procuring goods and services to meet planned or actual demand
The SCOR 'Source' process covers all activities related to ordering, receiving, and managing incoming goods from suppliers.
Question 7: A company uses ABC analysis to classify inventory. 'A' items typically represent:
- The majority of SKUs but a small portion of total value
- A small number of SKUs that account for the majority of total inventory value (Correct answer)
- Items with the highest unit weight
- Obsolete or slow-moving stock
Correct answer: A small number of SKUs that account for the majority of total inventory value
ABC analysis assigns 'A' status to roughly 20% of items that represent approximately 80% of total inventory value.
CWLP Supply Chain Operations & Optimization 4
Which supply chain design strategy holds minimal finished goods inventory and instead postpones final product configuration until a customer order is received?