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Supply Planning & Procurement Processes Flashcards

7 cards from real CPIM practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Supply Planning & Procurement Processes flashcards as text

  1. A firm uses a min-max inventory system. The minimum is 100 units and the maximum is 400 units. Current stock is 85 units. How many units should be ordered?

    Answer: 315 units

    When stock falls below the minimum, order up to the maximum: 400 − 85 = 315 units.

  2. Which of the following is a key output of a supplier scorecard review?

    Answer: Objective performance data used to guide supplier development or sourcing decisions

    Supplier scorecards aggregate KPIs (quality, delivery, cost) to identify improvement areas and inform sourcing strategies.

  3. In the context of procurement, what does the term 'make-or-buy analysis' evaluate?

    Answer: Whether to produce a component internally or source it from a supplier

    Make-or-buy analysis compares the costs and strategic implications of internal production versus external procurement.

  4. Which supply planning technique uses actual customer demand to pull replenishment through the supply chain rather than pushing based on forecasts?

    Answer: Demand-driven MRP (DDMRP)

    DDMRP uses strategically positioned buffers and actual demand signals to pull replenishment, reducing forecast-driven overproduction.

  5. A buyer issues an RFQ to five suppliers. Two respond with bids. What risk does this situation present?

    Answer: Insufficient competition, potentially yielding non-competitive pricing

    Low bid response rates reduce competitive tension, which may result in higher prices or less favorable terms for the buyer.

  6. Which incoterm places maximum responsibility on the seller, requiring them to deliver goods to the buyer's named destination cleared for import?

    Answer: DDP (Delivered Duty Paid)

    DDP requires the seller to bear all costs and risks including import duties and taxes until goods are delivered to the buyer's location.

  7. Which planning horizon concept defines the time boundary within which the master production schedule is frozen and changes require management approval?

    Answer: Demand time fence

    The demand time fence marks the near-term period where the MPS is fixed to protect execution; changes inside require management override.