MEM Supply Chain Management 1 — Questions and Answers
Question 1: Which supply chain strategy is best suited for products with highly unpredictable demand and short life cycles?
- Lean supply chain
- Agile supply chain (Correct answer)
- Efficient supply chain
- Continuous replenishment
Correct answer: Agile supply chain
An agile supply chain is designed to respond quickly to unpredictable demand and market volatility, making it ideal for short-lifecycle products.
Question 2: The bullwhip effect in supply chains refers to:
- Increased inventory accuracy upstream
- Amplification of demand variability as orders move upstream (Correct answer)
- Reduction in lead times due to coordination
- Synchronized production schedules across tiers
Correct answer: Amplification of demand variability as orders move upstream
The bullwhip effect describes how small fluctuations in end-customer demand get progressively amplified as they travel upstream through the supply chain.
Question 3: Which inventory management model uses a fixed reorder quantity triggered when stock falls to a predetermined level?
- Periodic review model
- Economic order quantity (EOQ) model
- Continuous review (Q) model (Correct answer)
- Just-in-time model
Correct answer: Continuous review (Q) model
The continuous review (Q) model places a fixed order quantity whenever inventory drops to the reorder point, allowing variable timing.
Question 4: Total Cost of Ownership (TCO) in procurement includes which of the following beyond purchase price?
- Only transportation costs
- Only warranty costs
- Acquisition, ownership, and post-ownership costs (Correct answer)
- Only the supplier's profit margin
Correct answer: Acquisition, ownership, and post-ownership costs
TCO captures all costs associated with acquiring, using, and disposing of a product, providing a complete financial picture beyond the sticker price.
Question 5: A Tier-1 supplier in a supply chain is best described as:
- A raw material extractor
- A supplier that sells directly to the end consumer
- A supplier that directly supplies the focal firm (Correct answer)
- A logistics provider
Correct answer: A supplier that directly supplies the focal firm
Tier-1 suppliers have a direct contractual relationship with the focal (buying) company, whereas Tier-2 suppliers supply to Tier-1.
Question 6: Which performance metric measures the percentage of customer orders fulfilled completely and on time?
- Fill rate
- Perfect order rate (Correct answer)
- Inventory turnover
- Cash-to-cash cycle time
Correct answer: Perfect order rate
The perfect order rate measures how often orders are delivered complete, on time, undamaged, and with correct documentation.
Question 7: Vendor Managed Inventory (VMI) transfers inventory replenishment responsibility to:
- The end customer
- The retailer
- The supplier (Correct answer)
- A third-party logistics provider
Correct answer: The supplier
In VMI, the supplier monitors the buyer's inventory levels and initiates replenishment orders, reducing ordering burden on the buyer.
MEM Supply Chain Management 1
Which supply chain strategy is best suited for products with highly unpredictable demand and short life cycles?