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A company finds that one of its warehouses is out of capacity to store products. Expanding the physical size of the warehouse is not an option. The most appropriate solution would be to increase the:
The purpose of price differentiation is to:
In a make-or-buy decision, if the product is modular and the company is dependent on knowledge and capacity, outsourcing most likely will be:
A company's annual cost of goods sold is $350 million, and inventory carrying cost is 18%. The company averages four inventory turns. The cost savings resulting from increasing inventory turns from four to six would be:
Throughout most of the supply chain, safety stock will be de-emphasized as a result of improved:
The practice of supply chain members acting in close collaboration while retaining independent ownership is known as:
A company considers moving a portion of its production to a distant country to support a major customer. Which of the following actions is most effective in mitigating the risk of financial loss in the event of a global economic downturn?
Which of the following types of risk typically would be most difficult to plan for and mitigate?
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Which of the following elements typically is considered to be an output of demand planning?

Question 482 - CSCP discussion

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In a supply chain network, the distribution center (DC) provides which of the following functions for the factory?

A.
Obsolete inventory location
Answers
A.
Obsolete inventory location
B.
Substitute producer
Answers
B.
Substitute producer
C.
Buffer from customer demand
Answers
C.
Buffer from customer demand
D.
Source of supply
Answers
D.
Source of supply
Suggested answer: C

Explanation:

In a supply chain network, the distribution center (DC) serves as a critical intermediary between the factory and the customer. One of its primary functions is to act as a buffer from customer demand. Here's how:

Demand Buffer: The DC holds inventory closer to the customer, absorbing fluctuations in demand and ensuring that the factory can operate more smoothly without frequent production changes.

Stock Management: By storing finished goods, the DC ensures that products are available for quick delivery, reducing lead times and improving customer satisfaction.

Flexibility: It provides flexibility in the supply chain, allowing for adjustments to be made in response to market changes without impacting factory operations directly.

Efficiency: This buffer role helps in maintaining efficient production schedules at the factory level, as the factory can produce in larger, more economical batches without the need to respond instantly to every change in customer orders. Overall, the DC helps to decouple production schedules from customer order cycles, enhancing both efficiency and responsiveness.

Reference:

'The Role of Distribution Centers in Supply Chain Management' - Logistics Management

'Buffering Supply Chain Demand with Distribution Centers' - MIT Sloan Management Review

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asked 16/09/2024
Justin Lee Foronda
32 questions
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