Free APICS CSCP Practice Exam with Questions & Answers | Set: 6

For a company that sells engineered-to-order products, the complexity of the purchasing process is the factor most likely to make the implementation of a Supplier Relationship Management (SRM) system difficult. Engineered-to-order products typically require customized components and materials, leading to a complex purchasing process involving multiple specifications, custom orders, and variable requirements. This complexity can challenge the standardization and integration capabilities of SRM systems, making implementation and ongoing management more difficult compared to more standardized purchasing processes.

Reducing the number of distribution centers in a system typically reduces the fixed warehousing costs and the cost of transportation from the plant to the distribution centers. Fewer distribution centers mean fewer locations to transport goods to, thus reducing transportation expenses. While there might be increased costs in other areas, such as longer shipping distances to customers, the primary savings come from reduced transportation and warehousing costs associated with the distribution centers.

Storing cycle inventory in the distribution centers might still incur costs depending on inventory levels and turnover.

Storing finished-goods inventory at the manufacturing plants might increase if fewer distribution centers result in holding more inventory at the plant.

Transportation from the distribution centers to the customer might increase due to longer distances from fewer centers.

In an advanced planning system (APS), the demand planning module feeds the master planning module. Demand planning involves forecasting customer demand and creating a demand plan that considers historical data, market trends, and other factors. This information is crucial for the master planning module, which uses it to develop production, procurement, and inventory plans to meet the forecasted demand efficiently.

Purchasing planning focuses on procurement activities and is influenced by the master plan.

Distribution planning deals with the logistics of distributing products and relies on the master plan.

Fulfillment planning involves ensuring customer orders are fulfilled, also based on the master plan.

Customizing can be an effective warehousing strategy because it allows a company to add value to the product through modification, labeling, and packaging. By customizing products closer to the point of delivery, companies can better meet specific customer requirements, reduce lead times, and improve overall customer satisfaction. This strategy also enables companies to respond quickly to market changes and reduce inventory holding costs.

Allocating available storage space to optimize handling costs is important but is not the primary reason for customizing.

Addressing trade-offs between space and material handling needs is part of warehouse management but does not highlight the value-adding aspect of customization.

Effectively designing its inbound and outbound dock areas improves efficiency but does not directly involve customization.

When countries form a trading bloc, they eliminate tariffs and other trade barriers among member countries, facilitating easier and cost-effective movement of goods. For the company, consolidating production within the trading bloc allows for greater economies of scale. By producing each product in a single facility, the company can optimize production efficiency, reduce per-unit costs, and improve consistency in quality. This approach also simplifies supply chain management by reducing complexity and leveraging the benefits of larger production runs.

Quality Issue Response: Addressing a quality issue requires a systematic approach to identify and eliminate the problem.

Root Cause Analysis: The first step is to understand why the issue occurred to prevent recurrence. This involves investigating the processes, materials, and procedures that may have contributed to the defect.

Explanation of Choice:

Option B: Separating non-conforming products is necessary but should follow root cause analysis.

Option C: Tracing the location of faulty products is part of containment but not the first step.

Option D: Replacing faulty products addresses customer satisfaction but does not prevent future issues.

The Ten Principles of the UN Global Compact cover areas related to human rights, labor, environment, and anti-corruption. Principle 6 specifically states the elimination of discrimination in respect of employment and occupation, which includes ensuring fair wages. However, paying different wages in different parts of the world for a given job classification can be acceptable if it reflects local living standards and economic conditions, ensuring fair compensation in each context.

Preventing a group of employees from forming a collective bargaining (union) group violates Principle 3, which supports the right to collective bargaining.

Requiring an individual to pay a fee for consideration in hiring or promotion decisions breaches principles related to non-discrimination and fair labor practices.

Withholding certain employment opportunities from specific groups of people directly violates Principles 1 and 6, which promote human rights and anti-discrimination.

Win-back Strategy: This involves efforts to re-engage and regain former customers who have stopped purchasing from the company.

Profitability Consideration: When implementing a win-back strategy, it is essential to evaluate the profitability of different customer accounts to ensure that the resources are being used effectively.

Segmentation: This is the process of dividing customers into groups based on common characteristics such as profitability, purchasing behavior, and loyalty.

Neglecting Segmentation: Failing to consider segmentation in a win-back strategy means the company might spend resources on low-profit or unprofitable customers, which can reduce the overall return on investment for the win-back efforts.

UN Global Compact Overview: The UN Global Compact is a voluntary initiative based on CEO commitments to implement universal sustainability principles and to take steps to support UN goals.

10 Guiding Principles: These principles cover areas such as human rights, labor, environment, and anti-corruption.

Objective: The primary goal of these principles is to promote responsible business practices and ensure that markets, commerce, technology, and finance can advance in ways that benefit economies and societies globally.

Explanation of Choice:

Option A: Reducing uncertainty for multinational firms is an outcome but not the primary purpose.

Option B: Setting minimum compliance levels is more regulatory and less about voluntary global advancement.

Option C: Aligning business needs with legal requirements is specific and less comprehensive.

Option D: Encompasses the broader goal of promoting global advancement through responsible practices.

Component commonality refers to the use of the same parts or components across multiple products. This strategy allows companies to optimize production runs for these components, leading to economies of scale, reduced inventory costs, and simplified procurement processes. By standardizing components, companies can also improve production efficiency, reduce lead times, and enhance flexibility in manufacturing. Additionally, it can facilitate better planning and control, as the demand for common components is aggregated across different products.

When sourcing globally, the most important challenge is balancing the difference between piece price and total cost. The piece price is the direct cost of purchasing the material, while the total cost includes all associated costs such as transportation, tariffs, warehousing, lead times, and risk of supply chain disruptions. Focusing solely on the piece price can lead to underestimating the actual cost implications of global sourcing, thus impacting the overall profitability and efficiency of the supply chain.

Identification of sources capable of producing the materials is important but not the primary challenge.

Availability of low-cost labor and energy is a factor but does not address the comprehensive cost considerations.

Complying with specific import/export issues is a regulatory challenge but is part of the total cost consideration.

A demand-driven supply network relies on the synchronization of demand information between all stakeholders in the supply chain. This synchronization ensures that all parties have access to accurate and timely demand data, enabling better alignment of production, inventory, and distribution with actual market needs. Automatic communications from POS terminals, joint safety stock determinations, and single sourcing are important elements but do not capture the full scope of the collaborative alignment required for a demand-driven approach. The core requirement is that demand information is shared and utilized across the supply chain to drive operational decisions.

When lot size increases, the number of units ordered in each batch grows, leading to several outcomes:

Inventory Levels: As lot size increases, more inventory is held at any given time. This results in higher average inventory levels.

Carrying Costs: Inventory carrying costs include storage, insurance, handling, and obsolescence. With more inventory on hand due to larger lot sizes, these costs increase proportionally.

Setup Costs: While larger lot sizes can reduce the frequency of setups, thereby reducing setup costs, the increase in carrying costs due to holding more inventory typically outweighs the setup cost savings.

Operating Expenses and Total Profit: Operating expenses might not necessarily increase with lot size, and total profit is not directly influenced by lot size alone but by a combination of factors like sales, costs, and efficiency.

Therefore, increasing lot size primarily leads to an increase in inventory carrying costs.

References

Silver, Edward A., David F. Pyke, and Rein Peterson. "Inventory Management and Production Planning and Scheduling." Wiley.

Chopra, Sunil, and Peter Meindl. "Supply Chain Management: Strategy, Planning, and Operation." Pearson.