D471 Global Supply Chain Management - Set 3 - Part 1

Correct Answer: Predicting future events based on past and present data

Forecasting in supply chain management is the process of making predictions about future demand and trends by analyzing historical data and current market conditions.

Correct Answer: Lean strategy

Lean strategies aim to eliminate waste and enhance efficiency in production processes, ensuring optimal resource utilization while maintaining product quality.

Correct Answer: The stock used to meet regular demand

Cycle stock represents the inventory held to satisfy normal demand levels, which is replenished regularly based on sales forecasts.

Correct Answer: Products are manufactured only after receiving a customer order.

The make-to-order strategy focuses on customizing products based on specific customer requests, which helps reduce excess inventory.

Correct Answer: A detailed list of raw materials, components, and subassemblies needed to manufacture a product

A bill of materials is essential for understanding the components required for production and helps in inventory management and planning.

Correct Answer: It reduces waste by producing only based on actual customer demand.

A pull system operates by producing goods in response to real-time demand, minimizing waste and excess inventory.

Correct Answer: To manage the flow of goods, information, and services

Logistics focuses on the planning, execution, and control of the movement and storage of goods and services throughout the supply chain.

Correct Answer: The rate at which inventory is sold and replaced

Inventory turnover is a key performance metric that indicates how efficiently a company is managing its inventory, calculated as the cost of goods sold divided by the average inventory.

Correct Answer: Shortage costs

Shortage costs arise when a business cannot fulfill customer demand due to insufficient inventory, potentially leading to lost sales and customer dissatisfaction.

Correct Answer: Coordinating demand forecasts with production capacity

Aggregate planning involves aligning demand forecasts with production capabilities to optimize resource utilization and meet customer needs effectively.

Correct Answer: A scheduling system for lean manufacturing

Kanban is a visual scheduling system that helps manage and control work in progress in lean manufacturing, facilitating smoother production flows.

Correct Answer: Improved focus on core competencies

Outsourcing allows companies to concentrate on their core competencies while delegating non-core activities to external suppliers, enhancing overall efficiency.

Correct Answer: Consolidating products from different suppliers for immediate distribution

Cross-docking is a logistics practice where products from multiple suppliers are sorted and consolidated for immediate shipment to customers, reducing storage time.

Correct Answer: The maximum output achievable under normal conditions

Effective capacity is the realistic production output that can be sustained under regular operating conditions, considering factors like maintenance and downtime.

Correct Answer: Reliability, responsiveness, assurance, empathy, and tangibles

Service quality is evaluated through dimensions that include reliability, responsiveness, assurance, empathy, and the tangibles associated with the service experience.

Correct Answer: To plan and control production quantities and timing

The MPS outlines specific products to be produced and their quantities over a defined period, coordinating production with customer demand.

Correct Answer: The amount of inventory kept on hand to prevent stockouts

Safety stock acts as a buffer to protect against uncertainties in demand and supply chain disruptions, ensuring that customer orders can be fulfilled.

Correct Answer: Increased distortion of demand information as it moves up the supply chain

The bullwhip effect describes how small fluctuations in consumer demand can lead to larger variations in demand seen by suppliers, resulting in inefficiencies and excess inventory.

Correct Answer: Test markets

Test markets involve launching a product in a limited area to gauge consumer response, making it a qualitative forecasting method based on actual customer behavior rather than historical data.

Correct Answer: Monitor and replenish inventory levels at the retailer's location

VMI enables suppliers to have visibility into inventory levels at the retailer’s site and manage replenishment proactively, enhancing efficiency and reducing stockouts.