Supply Chain Management (SCM) MCQs and Answers

1. Which of the following is NOT a key objective of supply chain management?

1. Cost reduction
2. Inventory optimization
3. Decreasing customer satisfaction
4. Improving efficiency

Answer: C) Decreasing customer satisfaction

Explanation:

Supply chain management aims to enhance customer satisfaction (decreasing customer satisfaction) by improving processes and delivering products efficiently.

Discuss this question

2. Just-in-time (JIT) is a strategy primarily focused on ___.

1. Minimizing transportation costs
2. Maximizing inventory levels
3. Increasing production downtime
4. Reducing lead times

Answer: D) Reducing lead times

Explanation:

JIT emphasizes reducing lead times to minimize inventory holding costs and improve responsiveness.

Discuss this question

3. The Bullwhip Effect refers to ____.

1. Smooth supply chain operations
2. Consistent demand patterns
3. Amplification of demand fluctuations
4. Minimal inventory holding costs

Answer: C) Amplification of demand fluctuations

Explanation:

The Bullwhip Effect describes the phenomenon where small fluctuations in demand at the consumer level can lead to significant fluctuations upstream in the supply chain.

Discuss this question

4. Which of the following is NOT a primary function of warehousing in supply chain management?

1. Inventory storage
2. Transportation
3. Order processing
4. Consolidation

Answer: B) Transportation

Explanation:

Warehousing involves inventory storage, order processing, and consolidation, but transportation is a separate function.

Discuss this question

5. RFID (Radio Frequency Identification) technology is primarily used for ____.

1. Tracking inventory
2. Forecasting demand
3. Optimizing production schedules
4. Managing supplier relationships

Answer: A) Tracking inventory

Explanation:

RFID technology enables real-time tracking of inventory throughout the supply chain.

Discuss this question

6. Vendor Managed Inventory (VMI) is a practice where ____.

1. Suppliers manage the inventory levels at customer locations
2. Customers manage the inventory levels at supplier locations
3. Both customers and suppliers independently manage their inventory levels
4. Inventory is managed by a third-party logistics provider

Answer: A) Suppliers manage the inventory levels at customer locations

Explanation:

VMI involves suppliers taking responsibility for managing inventory levels at their customers' locations based on agreed-upon criteria.

Discuss this question

7. Which supply chain strategy focuses on producing customized products in small batches?

1. Lean manufacturing
2. Agile supply chain
3. Mass production
4. Push strategy

Answer: B) Agile supply chain

Explanation:

Agile supply chains are flexible and responsive, often catering to customized product requirements in small batches.

Discuss this question

8. The Total Cost of Ownership (TCO) includes ____.

1. Only the purchase price of a product
2. Acquisition costs, operating costs, and end-of-life costs
3. Transportation costs only
4. Labor costs associated with production

Answer: B) Acquisition costs, operating costs, and end-of-life costs

Explanation:

TCO considers all costs associated with owning and using a product or service, including acquisition, operating, and disposal costs.

Discuss this question

9. A critical aspect of supply chain risk management is ____.

1. Eliminating all risks
2. Ignoring potential disruptions
3. Identifying and mitigating risks
4. Outsourcing risk management entirely

Answer: C) Identifying and mitigating risks

Explanation:

Supply chain risk management involves identifying potential risks and implementing strategies to mitigate their impact on operations.

Discuss this question

10. Which metric measures a company's ability to meet customer demand without delay?

1. Perfect Order Fulfilment
2. Inventory Turnover
3. Fill Rate
4. On-time Delivery

Answer: D) On-time Delivery

Explanation:

On-time delivery measures the percentage of orders delivered to customers on or before the promised delivery date.

Discuss this question

11. Cross-docking is a strategy primarily aimed at ____.

1. Maximizing inventory holding costs
2. Minimizing transportation costs
3. Increasing order processing time
4. Expanding warehouse space

Answer: B) Minimizing transportation costs

Explanation:

Cross-docking involves transferring products directly from inbound to outbound transportation vehicles, reducing the need for storage and handling.

Discuss this question

12. Which inventory management technique involves categorizing items based on their importance and managing each category differently?

1. Economic Order Quantity (EOQ)
2. ABC analysis
3. Just-in-time (JIT)
4. Reorder Point (ROP)

Answer: B) ABC analysis

Explanation:

ABC analysis classifies inventory items into categories based on their value and importance, allowing for tailored management strategies.

Discuss this question

13. Collaborative planning, forecasting, and replenishment (CPFR) involve ____.

1. Outsourcing production planning to suppliers
2. Maintaining high levels of inventory to ensure product availability
3. Sharing information and coordinating activities between trading partners
4. Minimizing communication with customers and suppliers

Answer: C) Sharing information and coordinating activities between trading partners

Explanation:

CPFR promotes collaboration between trading partners by sharing information and jointly planning forecasts and replenishment activities.

Discuss this question

14. Which of the following is NOT a benefit of supply chain visibility?

1. Improved decision-making
2. Reduced risk of disruptions
3. Increased lead times
4. Enhanced customer satisfaction

Answer: C) Increased lead times

Explanation:

Supply chain visibility typically leads to reduced lead times by providing better insight into operations and potential bottlenecks.

Discuss this question

15. A company implementing Vendor Managed Inventory (VMI) is likely to experience ____.

1. Decreased stockouts
2. Increased inventory levels
3. Longer order processing times
4. Reduced reliance on suppliers

Answer: A) Decreased stockouts

Explanation:

VMI often leads to decreased stockouts as suppliers manage inventory levels to ensure product availability.

Discuss this question

16. Which supply chain performance metric measures the amount of time required to convert raw materials into finished products?

1. Order cycle time
2. Inventory turnover ratio
3. Cash-to-cash cycle time
4. Manufacturing lead time

Answer: D) Manufacturing lead time

Explanation:

Manufacturing lead time measures the time taken to complete the production process, from raw materials to finished goods.

Discuss this question

17. Demand forecasting helps supply chain managers to ____.

1. Eliminate all demand variability
2. Plan production schedules with certainty
3. Make informed decisions about inventory levels
4. Increase stockouts and backorders

Answer: C) Make informed decisions about inventory levels

Explanation:

Demand forecasting provides insights into expected demand patterns, allowing for better inventory management and resource allocation.

Discuss this question

18. Which supply chain management concept emphasizes minimizing waste and maximizing efficiency?

1. Lean manufacturing
2. Six Sigma
3. Kaizen
4. Total Quality Management (TQM)

Answer: A) Lean manufacturing

Explanation:

Lean manufacturing focuses on eliminating waste and optimizing processes to improve efficiency and reduce costs.

Discuss this question

19. The Pareto Principle (80/20 rule) suggests that ____.

1. 80% of sales come from 20% of customers
2. 20% of sales come from 80% of customers
3. 80% of inventory turnover comes from 20% of products
4. 20% of inventory turnover comes from 80% of products

Answer: A) 80% of sales come from 20% of customers

Explanation:

The Pareto Principle states that a significant portion of outcomes (80%) comes from a small portion (20%) of causes.

Discuss this question

20. Which of the following is NOT a component of the SCOR model?

1. Plan
2. Source
3. Sell
4. Deliver

Answer: C) Sell

Explanation:

The SCOR model consists of Plan, Source, Make, Deliver, and Return as its primary components, focusing on supply chain processes.

Discuss this question