APICS CSCP Practice Test - Questions Answers, Page 44

When considering storage locations for high volume products, the primary factor is velocity, which refers to the speed at which inventory moves through the supply chain. High-velocity products are those that are sold and restocked frequently, so their storage locations should be optimized to ensure quick and efficient handling and transportation. This minimizes handling time and costs, reduces stockouts, and improves overall supply chain efficiency. Storage locations should be strategically chosen to support fast turnover and easy access to these high-demand products.

Reference: Lambert, D. M., & Cooper, M. C. (2000). Issues in Supply Chain Management, Industrial Marketing Management.

Increasing market share for products that are critical manufacturing components can be effectively achieved by providing a level of service that enhances customer uptime. Uptime refers to the operational time that the customer's equipment or processes are available and functioning. By ensuring timely delivery, reliable quality, and quick response to service needs, suppliers can significantly reduce downtime for their customers, thereby increasing customer satisfaction and loyalty. This high level of service differentiates the supplier from competitors and makes them a preferred partner, which can lead to increased market share.

Reference: Christopher, M. (2016). Logistics & Supply Chain Management.[

Investing to reduce damages due to weather conditions is an example of risk mitigation. Risk mitigation involves taking proactive steps to reduce the adverse effects of potential risks. In this case, the shipping company is investing in measures such as better packaging, improved weather forecasting systems, or reinforced shipping routes to protect against weather-related damages. These actions help to minimize the impact of weather risks on their operations, ensuring more reliable and safe delivery of goods.

Reference: Waters, D. (2007). Supply Chain Risk Management: Vulnerability and Resilience in Logistics.

Definition of Parallel Operations: Parallel operations involve performing multiple processes simultaneously, rather than sequentially, to improve efficiency and reduce the overall time taken to complete a series of tasks.

Impact on Lead Times: By redesigning processes to maximize the use of parallel operations, tasks that were previously dependent on one another can be performed at the same time. This overlap reduces the total time required to complete all tasks, thus leading to reduced lead times.

Comparison with Other Options:

Increased Processing Costs (A): This is unlikely as parallel operations often lead to efficiency gains that can reduce costs.

Increased Buffer Capacity (B): Parallel operations do not necessarily impact buffer capacity; instead, they streamline workflows.

Reduced Requirement for Support Materials (C): While efficiencies might reduce some support material requirements, this is not a primary outcome.

Conclusion: The most direct and expected outcome of maximizing parallel operations is reduced lead times, improving overall process efficiency.

APICS Dictionary, 16th Edition.

'Operations Management' by William J. Stevenson.

Definition of Reverse Auction: In a reverse auction, buyers post their requirements, and suppliers compete to offer the lowest price to secure the contract. This is the opposite of traditional auctions where buyers bid for goods or services.

Mechanism: Suppliers submit lower bids to undercut their competitors, aiming to offer the most competitive price.

Comparison with Other Options:

Dutch Auction (A): In a Dutch auction, the price starts high and is lowered until a buyer accepts the price, used in specific scenarios but not primarily for lowest price competition.

Business-to-Business Commerce (B2B) (C): B2B encompasses a broad range of transactions between businesses but doesn't specifically focus on lowest price competition.

Business-to-Consumer Sales (B2C) (D): B2C involves selling products directly to consumers and does not primarily focus on suppliers offering the lowest price.

Conclusion: The reverse auction is the form of electronic commerce where suppliers aim to offer the lowest price to buyers.

'Supply Chain Management: Strategy, Planning, and Operation' by Sunil Chopra and Peter Meindl.

APICS Dictionary, 16th Edition.

Definitions:

Engineer-to-Order (ETO): Products are designed and built to customer specifications after the order is received.

Assemble-to-Order (ATO): Products are assembled from pre-existing components after receiving an order.

Inventory Implications: Moving from ETO to ATO requires maintaining an inventory of components and subassemblies that can be quickly assembled into final products.

Increased Costs:

Inventory Costs: Increased because components need to be stocked to facilitate quick assembly.

Comparison with Other Costs:

Transportation (A): Costs per unit generally remain unaffected by the move from ETO to ATO.

Manufacturing (C): Manufacturing costs per unit typically decrease due to standardized components.

Procurement (D): Procurement costs might be streamlined due to bulk buying of components but do not necessarily increase per unit.

Conclusion: The shift to ATO usually increases inventory costs per unit due to the need for maintaining a stock of components.

'Manufacturing Planning and Control for Supply Chain Management' by Thomas E. Vollmann, William L. Berry, and David C. Whybark.

APICS Dictionary, 16th Edition.

Three-Level Distribution Network: Involves central warehouses, regional warehouses, and retail outlets.

Risk Pooling: Aggregating inventory at fewer locations to reduce variability in demand and inventory costs.

Impact of Eliminating a Level:

Eliminating Regional Warehouses: Direct shipments from central warehouses to retail outlets reduce the aggregation points.

Decreased Risk Pooling: Fewer aggregation points mean demand variability is less smoothed out, leading to decreased risk pooling benefits.

Comparison with Other Outcomes:

Total Transportation Costs (A): Likely to increase due to more frequent direct shipments.

Retail Outlet Order Frequency (B): Might increase due to more frequent smaller shipments.

Deliveries to Retail Outlets (C): Likely to increase in number due to direct shipment requirements.

Conclusion: The most likely outcome is a decrease in risk pooling benefits.

'Designing and Managing the Supply Chain' by David Simchi-Levi, Philip Kaminsky, and Edith Simchi-Levi.

APICS Dictionary, 16th Edition.

Sales and Operations Planning (S&OP): A process to align production and demand, ensuring all functions work towards the same goals.

Principal Outcome: The key result of S&OP is achieving cross-functional alignment where all departments (sales, marketing, production, finance) collaborate and synchronize their plans.

Comparison with Other Outcomes:

Level Production Schedule (A): This can be a result but is not the principal outcome.

Increased Sales (C): This might be a long-term effect but not the direct result of S&OP sessions.

Strategic Business Plan (D): While S&OP supports strategic planning, the immediate outcome is better cross-functional coordination.

Conclusion: Successful S&OP results primarily in cross-functional alignment, ensuring that all departments are aligned with the business objectives.

'Sales and Operations Planning: The How-To Handbook' by Thomas F. Wallace and Robert A. Stahl.

APICS Dictionary, 16th Edition.

A freight invoice is a bill issued by a carrier detailing the charges for transportation services provided. It itemizes the cost associated with the shipment, including the base freight rate, fuel surcharges, accessorial charges, and any other fees applicable. The shipment manifest lists the cargo being transported, and a bill of lading (B/L) serves as a receipt and contract of carriage. A letter of credit (L/C) is a financial document ensuring payment for shipped goods. Therefore, the freight invoice specifically represents the carrier's method of charging for transportation services.

Reference:

'Freight Invoice Definition.' Investopedia.

'Transportation Documentation.' CSCMP (Council of Supply Chain Management Professionals).