Deck 3: APICS Certified Supply Chain Professional

Question 1

When designing a supply chain for strategic advantage, a company first should consider:

A) the impact on customers using Just-in-Time manufacturing.
B) the financial stability of suppliers.
C) matching the supply chain to product type.
D) whether to use custom or standard parts.

Answer 1

C

Question 2

A company's annual cost of goods sold is $350 million, and inventory carrying cost is 18%. The company averages four inventory turns. The cost savings resulting from increasing inventory turns from four to six would be:

A) $29,000,000.
B) $15,750,000.
C) $10,500,000.
D) $ 5,250,000.

Answer 2

D

Question 3

The primary objective of supply chain management is:

A) minimizing transportation costs.
B) reducing inventory levels.
C) taking a systems approach.
D) implementing advanced technologies.

Answer 3

C

Question 4

Which of the following considerations is an important supply chain design decision?

A) Product design
B) Selecting supporting information systems
C) Identifying labor force requirements
D) Identifying training programs

Question 5

The primary reason for the evolution of the supply chain is:

A) fewer rejects due to poor quality.
B) increased on-time delivery.
C) increased cost savings.
D) increased communication.

Question 6

The question below is based on the following flowchart: Which of the following phrases most accurately describes the complete flow of demand information?

A) From supplier to customer
B) From customer to manufacturer
C) From customer to supplier
D) From supplier to manufacturer

Question 7

Risk pooling enables a lower total inventory level without affecting service levels based on which of the following assumptions?

A) Inventory turnover ratio can be reduced.
B) Aggregate demand is more accurate than disaggregate demand.
C) The planning time fence can be adjusted as needed.
D) The supplier shares some risk for holding inventory.

Question 8

A remanufacturer of equipment is most likely to have what type of supply chain?

A) Modular logistics
B) Reverse logistics
C) Mixed model
D) Lateral

Question 9

Which of the following attributes typically makes reverse logistics processes more complicated than outbound logistics processes?

A) Lead times for shipments are more variable.
B) Individual packages and cartons are less uniform.
C) There are more regulations mandated by local governments.
D) There is more competition for scarce transportation lanes.

Question 10

The use of a seasonal index as a forecasting technique measures the ratio of the:

A) average seasonal demand to the average demand for all periods.
B) average demand for all periods to the average seasonal demand.
C) average seasonal demand to the standard deviation of the demand for all periods.
D) standard deviation of the seasonal demand to the standard deviation of demand for all periods.

Question 11

Which of the following types of information would be an appropriate basis for a qualitative forecast?

A) Leading indicators
B) Regression analysis
C) Order history
D) Shipment history

Question 12

Which of the following scenarios represents a correct application of the Supply-Chain Operations Reference-model (SCOR)?

A) Sales and marketing refers to SCOR to improve demand generation.
B) Production and engineering uses SCOR best practices to design a new "make" process flow.
C) Distribution and logistics selects suppliers from the SCOR reference list.
D) Marketing and development incorporates SCOR Level I metrics for new product design.

Question 13

In addition to sales history, current customer orders, and forecasted demand, which of the following data sources should be used as part of a demand management process?

A) Inventory levels
B) Contractual obligations
C) Customer profitability
D) Scheduled marketing activities

Question 14

The factors to consider in the make-or-buy decision include costs, proprietary knowledge, and:

A) design history.
B) available capacity.
C) inventory balance.
D) warehouse location.

Question 15

The focus of collaborative supply chain management differs from a transactional approach by its emphasis on the:

A) transportation of goods to the next link in the chain.
B) flow of product information up to the next level of the chain.
C) flow of demand information and cash up the chain.
D) flow of supply into an organization.

Question 16

Compared to a global strategy, a multicountry strategy would be characterized by:

A) strategy coordination across countries.
B) preferred suppliers located in host countries.
C) major strategic decisions coordinated centrally.
D) products adapted to local needs.

Question 17

After identifying the potential causes for delays in communicating demand information up the supply chain, the trading partners should take which of the following actions?

A) Implement a higher-speed data communications network.
B) Change procedures so data is communicated more frequently.
C) Identify the root causes for the delays.
D) Map and analyze the value stream.

Question 18

Which of the following corporate strategies is most consistent with a flexible supply chain strategy?

A) Being the low-price leader
B) Providing the highest-quality service
C) Providing mature products with stable sales
D) Emphasizing the quality of the product

Question 19

Which of the following situations is an example of postponement?

A) Shipments are broken down into small groups for reshipment.
B) Shipments are consolidated immediately for reshipment.
C) Production begins after a customer order is received.
D) Partially assembled goods are assembled at a later stage.

Question 20

The process of gathering data about what customers need and ensuring that desired features are included in the design and initial planning phase of a new product or service is known as:

A) a quick response program.
B) quality function deployment.
C) total quality management.
D) early supplier involvement.

Question 21

Which of the following outcomes is a benefit typically expected of customer relationship management (CRM)?

A) Reducing the size of the sales force by automating activities
B) Gaining a better understanding of customer requirements
C) Implementing automated inter-organizational processes
D) Focusing sales efforts on the most profitable customers

Question 22

A company manufactures special products for select customers. When demand for these products drops, the manufacturer can switch the production line to a commodity-type product that can be sold on the open market at reduced terms to generate cash. The company is executing a corporate strategy that is based on:

A) customer focus and alignment.
B) forecast accuracy.
C) multiple downstream channels.
D) multiple upstream supply chains.

Question 23

A firm supplies products and services to a wide variety of industries with varying requirements for responsiveness and reliability.  Many customers across these industries are not satisfied with the firm's ability to meet the lead time and on time delivery requirements.  Which of the following tools is most appropriate for the firm to use to improve customer service?

A) Customer service ratio metrics
B) Market segmentation
C) Customer relationship management (CRM)
D) Supply Chain Operations Reference (SCOR®)

Question 24

Compared to a blanket purchase order, a supplier alliance agreement is best differentiated by:

A) efficient material replenishment processes.
B) clearly identified roles for the buyer and seller.
C) a shared vision of added value.
D) a sole-source agreement.

Question 25

A return material authorization (RMA) policy is used in reverse logistics to:

A) physically transport returned items by using an efficient transportation mode.
B) minimize the number of returned items by involving product design and demand forecasting.
C) reduce the cost of returned items by refusing to accept items that should not be returned.
D) reclaim substantial value from returned items by recycling.

Question 26

A company's decision to charge different prices for the same service sold in different market segments is most likely based on which of the following metrics?

A) Internal rate of return (IRR)
B) Lifetime customer value (LCV)
C) Net present value (NPV)
D) Return on investment (ROI)

Question 27

A company plans to maximize profitability by charging more for its products at retail locations than on its website. Which of the following segmentation strategies would best support this plan?

A) Group
B) Channel
C) Regional
D) Location

Question 28

The probability of customer dissatisfaction is highest when which of the following conditions exists?

A) Customer expectations are clearly defined.
B) Supplier execution is too low.
C) There is a gap between expected performance and perceived performance.
D) There is a gap between what was indicated and what was accomplished.

Question 29

Maintaining a long-term collaborative relationship with a trading partner requires:

A) formal and informal communication.
B) interconnected information systems.
C) one partner regularly exercising power.
D) standardized terms of agreement.

Question 30

A company that produces standardized products and sells them through retailers via a responsive transportation system has decided to expand its sales with an online store for customized products. Which of the following distribution strategies would be the most appropriate for the business-strategy change?

A) Local distribution centers serving retailers and online sales
B) Centralized cross-docking facilities serving retailers and online sales
C) A centralized distribution center serving retailers and direct shipment from the factory serving online sales
D) A centralized distribution center serving retailers with transshipment arrangements serving online sales

Question 31

A company considers outsourcing its information technology support to a low-cost region on another continent. The company currently has no business presence there. Which of the following actions is most effective in helping to select a service provider?

A) Contacting the country's consulate for leads
B) Contacting the country's local government for recommendations
C) Visiting several potential providers before making a selection
D) Finding a trusted local business agent to help in the search

Question 32

What is the primary role of marketing in supporting supply chain management?

A) Selecting favored supplier partners
B) Developing efficient customer channels
C) Focusing on short-term forecasting accuracy
D) Working with research and development on slow-moving products

Question 33

Which of the following consequences is a result of shipping directly from the point of manufacture to the customer rather than through a distribution network?

A) Delivery lead times are consistent.
B) Risk pooling benefits are negated.
C) Distribution overhead is increased.
D) Order-fill rate is decreased.

Question 34

Which of the following is the most important result when a company implements customer relationship management?

A) Profits are maximized.
B) Retention of key customers is increased.
C) Product options are increased.
D) Transaction costs are decreased.

Question 35

Which of the following practices has improved management of the customer pipeline?

A) Reverse auctions
B) Sales force automation
C) Finite capacity planning
D) Point-of-purchase metrics

Question 36

A media company offers a majority of its movies through a specific distributor. The media company is beginning to produce content for a new foreign market to which the distributor has exclusive access. To maximize savings and gain entry to this new market, the media company should:

A) create a contract for the new market.
B) enter into a partnership.
C) form a strategic alliance.
D) acquire the distributor.

Question 37

Compared to mass-media marketing, customer relationship management has the advantage of allowing the organization to:

A) compete for customers based on service.
B) reach a larger number of potential customers.
C) reduce inventory to improve cash flow.
D) focus on attracting new customers.

Question 38

An advantage of using a third-party logistics service (3PL) is improved:

A) on-time delivery of shipments due to higher inventory levels.
B) cost structure due to economies of scale.
C) access to smaller markets due to localization.
D) risk visibility due to inventory consolidation.

Question 39

A large wholesaler formerly owned a number of delivery trucks. The wholesaler sold all of its trucks and now purchases transportation services from fleet operators. This is an example of which of the following strategies?

A) Selling and leasing back equipment.
B) Renting equipment on consignment.
C) Using a third-party logistics provider.
D) Using an owner-operator fleet.

Question 40

Reverse supply chain activity typically peaks nearest the beginning of which of the following stages of the product life cycle?

A) Introduction
B) Growth
C) Maturity
D) Decline

Question 41

Which of the following statements about warehouse layout and storage is correct?

A) Product weight is the major factor driving warehouse layout.
B) Products with low volume are typically placed at the lower level in storage racks.
C) Warehouses that utilize fixed locations storage typically minimize space requirements.
D) A typical warehouse is engaged in a combination of short term and extended storage alternatives.

Question 42

A primary objective of a lean enterprise is to:

A) analyze and focus the value stream along all functions to maximize value for the ultimate customer.
B) employ people who have enhanced abilities to learn and adapt to the corporate culture.
C) continuously improve processes and procedures to maintain a level production schedule.
D) create value for its suppliers by incorporating lean manufacturing principles into a supplier certification process.

Question 43

Which of the following measures best describes fill rate?

A) Ratio of available inventory to cost of goods sold (COGS)
B) Ratio of cost of goods sold to available inventory
C) Percentage of demand satisfied by available inventory
D) Percentage of closed orders to total orders

Question 44

Which of the following indicators is most appropriate to use as a measure of supply chain utilization?

A) Production equipment productivity
B) Net asset turns
C) Value-added productivity per employee
D) Upside flexibility

Question 45

Enterprise resources planning (ERP) is defined as a:

A) framework for organizing, defining, and standardizing business processes to use its internal knowledge to seek external advantage.
B) production control system that determines priorities of in-process work.
C) software module used to determine whether sufficient capacity is available to ship customer orders on time.
D) process whereby sales, marketing, and operations determine what products will be sold and what resources will be required for production.

Question 46

A main benefit of using customer relationship management (CRM) is:

A) maximization of on-time delivery.
B) minimization of product returns.
C) identification of customers with high lifetime value.
D) finding new markets for existing products and services.

Question 47

Companies are more likely to consider the consequences of their product design decisions when they view the reverse supply chain as an extension of the:

A) forward supply chain.
B) marketing process.
C) manufacturing process.
D) sales and operations planning process.

Question 48

The primary reason for a firm to pursue strategic supply chain activities is to:

A) gain competitive advantage.
B) reduce costs.
C) increase productivity.
D) decrease product lead time.

Question 49

Replacing a raw material in a manufacturing process with an alternate material that reduces emissions is an example of using:

A) the global reporting initiative (GRI).
B) recycling.
C) rework.
D) life cycle assessment (LCA).

Question 50

One key factor to consider when selecting suppliers for their potential to sustain long-term, mutually profitable relationships is:

A) landed cost.
B) quality metrics.
C) operational performance.
D) financial viability.

Question 51

A company has been delivering a global product that no longer appears profitable. Senior management's best response is to:

A) analyze product profitability by market segment.
B) discontinue the product based on eroding profitability.
C) provide additional incentives to the sales force.
D) increase promotional activity across all markets.

Question 52

Which of the following actions by a group of trading partners is most likely to quickly improve their economic performance?

A) Developing a comprehensive product and service strategy
B) Implementing collaborative interorganizational systems
C) Outsourcing interorganizational business processes
D) Redesigning product packaging to reduce volume and weight

Question 53

Cost reduction, improvement of company focus, and freeing assets from noncore activities are among the results achieved through effective implementation of:

A) supply chain management.
B) service supplier management.
C) collaboration.
D) outsourcing.

Question 54

Keeping all other factors equal, a company typically will try to maintain higher service levels for products with:

A) wider variety.
B) shorter lead time.
C) higher profit margins.
D) lower sales volumes.

Question 55

A company has significant cash invested in its finished goods inventories. What action can this company take to significantly reduce its inventory investment while maintaining its customer service levels?

A) Begin production after receipt of customer orders
B) Move the customer decoupling point from finished goods to components
C) Increase component assembly lead times
D) Plan key component material with preferred suppliers

Question 56

Which of the following methods is used to minimize the bullwhip effect?

A) Outsourcing noncore business activities
B) Reducing the number of stock keeping units (SKUs)
C) Reducing lead time
D) Increasing factory inventory

Question 57

A firm supplies a single line of products to consumers using retail stores and on-line sales, distributors, and wholesalers.  Currently the firm has common pricing and response times for sales in each sales channel.  Which of the following tools is most appropriate to employ to improve profitability?

A) Customer segmentation
B) Customer-facing ordering systems
C) Customer relationship management (CRM)
D) Supply Chain Operations Reference (SCOR®)

Question 58

When determining lot sizes, consideration should be given to balancing which of the following costs?

A) Quality costs and product costs
B) Cost of goods sold (COGS) and indirect labor costs
C) Unit sales price and unit cost
D) Ordering costs and carrying costs

Question 59

Which of the following documents includes the valuation of goods for assessment of duties?

A) Insurance certificate
B) Export declaration
C) Bill of landing (B/L)
D) Commercial invoice

Question 60

A company distributes products through a multitiered distribution network. Recently there has been high demand variability for a mature product that had experienced stable demand for several years. The most appropriate way to address the variability of demand is to:

A) extend forecast horizon.
B) increase distribution safety stock targets.
C) increase manufacturing throughput.
D) increase demand visibility with all partners.

Question 61

An item must be added to inventory to support new business. Which of the following inputs should be considered to determine minimum inventory level?

A) Consumption rate
B) Qualified supplier
C) ABC classification
D) Number of sales transactions

Question 62

Sustainable business practices are those capable of meeting the:

A) environmental protection requirements of today.
B) requirements of producing products with minimum resources.
C) environmental protection requirements of the future.
D) needs of the present while considering the needs of the future.

Question 63

Which of the following actions is most likely to improve the flow of funds between a group of supply chain partners?

A) Increasing the level of information sharing and collaboration
B) Negotiating a single set of terms for the trading partners
C) Increasing a partner's cash-to-cash cycle time
D) Selecting a single currency for all group transactions

Question 64

Products that share characteristics of predictable demand and low profit margin will have competition based on which of the following?

A) Fastest to market
B) Lowest landed cost
C) Product improvements
D) Supply flexibility

Question 65

Sell-side e-commerce must include:

A) automated returns processing.
B) advance ship notice (ASN).
C) electronic data interchange (EDI).
D) automated order entry and tracking.

Question 66

A company has an asset turnover ratio of 1.8, inventory of $3,000, a 20% profit margin, and $5,000 in total assets. What is the total sales volume for the company?

A) $5,400
B) $9,000
C) $15,000
D) $25,000

Question 67

Using new housing construction data as a predictor of construction equipment sales is an example of what type of forecasting method?

A) Causal
B) Time series
C) Judgement
D) Market survey

Question 68

Transforming company policies into objectives and specific goals creates a:

A) performance standard.
B) organizational benchmark.
C) supply chain metric.
D) balanced scorecard.

Question 69

A manufacturing company has several inexpensive items that are critical to the production process. The supply of these items has been depleted several times. Which of the following actions is most likely to reduce stockouts?

A) Assign personnel to manage the items.
B) Standardize the items.
C) Increase minimum inventory levels for the items.
D) Initiate a vendor-managed inventory (VMI) program for the items.

Question 70

Which of the following inputs is used in developing a project charter?

A) Business case
B) Work breakdown structure
C) Project management plan
D) Proposed solutions

Question 71

Which of the following consequences is typical of a push-based supply chain?

A) Longer lead times
B) Higher product obsolescence
C) Lower economies of scale
D) Smaller production batches

Question 72

A well-grounded program in which a company focuses on customer success involves:

A) a thorough understanding of individual customers' requirements.
B) a commitment to focus on short-term business relationships.
C) a focus on relationships having high profitability and low potential for growth.
D) making similar commitments to customers in order to maintain lasting relationships.

Question 73

Which of the following costing approaches directly reflects logistics performance?

A) Activity-based
B) Total landed
C) Standard
D) Weighted average

Question 74

When a company works on controlling stockout frequency, the company is addressing which of the following attributes of customer service?

A) Availability
B) Delivery time
C) Service reliability
D) Service recovery

Question 75

Which of the following cost elements typically would be included in the cost of carrying inventory?

A) Scrap during production
B) Depreciation of product equipment
C) Direct materials
D) Obsolescence

Question 76

Bullwhip effect can be reduced by which of the following combinations of actions?

A) Information sharing, batch ordering, variable pricing
B) Shortage gaming, frequent ordering, consistent pricing
C) Information sharing, frequent ordering, variable pricing
D) Information sharing, frequent ordering, consistent pricing

Question 77

A company with a fleet of trucks is considering using a third-party logistics (3PL) provider to distribute a new product. Which of the following benefits most likely will result?

A) Fewer tax implications
B) Limited exposure to regulatory violations
C) Fixed delivery costs
D) Better market accessibility

Question 78

A pattern of increased shipments from manufacturing plants to a central warehouse at month-end and quarter-end typically would cause which of the following situations in a central warehouse?

A) Fluctuation in required labor resources
B) Decreased use of storage capacity
C) Decreased transportation costs
D) Increased outbound shipments

Question 79

One of the key benefits of adopting a lean supply chain philosophy is the reduction of inventories that allow:

A) decreased obsolescence.
B) freeing up working capital for investment.
C) reduced material handling surcharges.
D) lower transaction costs.

Question 80

Which of the following elements typically is considered to be an output of demand planning?

A) Transportation routes and schedules
B) Detailed production schedules
C) Product family and item forecasts
D) Customer historic tracking report