Question 1

A company finds that tracking demand for products sold at its retail outlets makes forecasting a challenge. Which of the following would be MOST useful in providing rapid updates when dealing with suppliers?

Options :

A : Regression analysis of future sales

B : Safety stock review

C : Safety stock review

D : Probability modeling

Answer: C

Question 2

A buyer is reviewing a quote for a shipment of electronic materials from Europe to Africa. The supplier offers a reasonable price for the materials and plans to deliver them using its regular shipping service. The terms are such that the buying company takes possession of the goods once they are loaded onto a boat in Europe. Which of the following information should be of GREATEST concern to the buyer?

Options :

A : The risks involved in the shipping terms

B : Whether or not export regulations will be followed

C : The reason for choosing sea transportation over air

D : The details of the proposed Incoterms® 2020 rule

Answer: A

Question 3

A graph of a firm’s inventory replenishment system reveals the following

Which of the following is TRUE’

Options :

A : The order cycle is two and a half days.

B : The average inventory is 1,850 units.

C : There is a fixed order quantity of 500 units.

D : There is a fixed order quantity of 500 units.

Answer: D

Question 4

XYZ, Inc. notices that one of its suppliers has been failing to achieve on-time delivery, even though XYZ sends it a 6-month projected order forecast every month. The supplier claims that it takes nine months to receive important raw materials, and that this causes the poor delivery performance. Nevertheless, XYZ must continue purchasing from this supplier, as it is a sole supplier. Given this situation, which of following is the BEST course of action for XYZ to take

Options :

A :

Send the 6-month forecast data weekly instead of monthly to the supplier, and request it purchase raw materials based on the projections

B :

Request that the supplier submit an open order report on a weekly basis with details on the latest shipment status

C :

Discuss the issue with engineering to determine if the firm can use different raw materials to manufacture the product

D :

Extend the forecast timeline from six months to one year, and request the supplier purchase raw materials based on the projections

Answer: D

Question 5

DEF, Inc. is in the ramp-up phase of a unique medical device. The device has a two-year life expectancy. The sales forecast for the ramp-up period is as follows MonthJulAugSepOctNovDecJanFeb

Unit Sales1001502006001,4002,2004,00010,000

Demand after February is expected to remain at 10,000 units per month for several months, then decrease

gradually. The units are small, and thus maintaining an inventory of up to 10,000 units is possible.

There are only three suppliers capable of providing the specialized component critical to this product. The

production capacities of these suppliers are as follows:

•Supplier X has a capacity of 500 units per month at a cost of S20 per unit, representing 80% of its total

business

•Supplier Y has a capacity of 2,000 units per month at a cost of S2O.5O per unit, representing 50% of its total

business

•Supplier Z has a capacity of 20,000 units per month at a cost of $20.70 per unit, representing 10% of its total

business

Two of these companies—Supplier X and Supplier Y—are minority businesses.

Given this situation, DEF should contract with

Options :

A : Supplier Z only, as it can best fulfill the forecasted demand

B :

all three companies in a tiered system, with up to 40% from Supplier X and Y-s total monthly business, and the remainder going to Supplier Z

C : Suppliers X and Y, and work with them to increase their production capability

D :

all three companies in a tiered system, with up to 5,000 units from Supplier X, 20,000 units from Supplier Y, and the remainder from Supplier Z

Answer: B

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