C720 Operations and Supply Chain Management Practice Questions - Set 1 - Part 1

Test your knowledge of Operations and Supply Chain Management concepts with these practice questions. Each question includes detailed explanations to help you understand the correct answers.

Question 1: A company wants to minimize inventory costs for products with long life cycles, stable demand, and low profit margins. Which type of supply chain is best suited for this purpose?

a) Agile supply chain

b) Lean supply chain

c) Responsive supply chain

d) Innovative supply chain

Question 2: A business wants to protect itself against unexpected demand changes. Which inventory strategy should they adopt to ensure they can still meet customer demand without delay?

a) Vendor Managed Inventory (VMI)

b) Economic Order Quantity (EOQ)

c) Safety stock

d) Just-in-time (JIT)

Question 3: A company has decided to own its suppliers to ensure tighter control over its production. This strategy is known as:

a) Forward vertical integration

b) Backward vertical integration

c) Horizontal integration

d) Strategic partnership

Question 4: An organization wants to align its entire supply chain around responsiveness and adaptability to rapidly changing customer demands. This type of supply chain is best described as:

a) Lean

b) Agile

c) Traditional

d) Decentralized

Question 5: What is the primary goal of firms using the EOQ (Economic Order Quantity) model?

a) Increase production speed

b) Minimize ordering and holding costs

c) Maximize total costs

d) Reduce safety stock requirements

Question 6: In the context of supply chain management, which of the following is most accurately described as the flow and transfer of goods and services from raw material extraction to the final consumer?

a) Logistics

b) Reverse logistics

c) Supply chain

d) Inventory management

Question 7: A company uses a system where it orders materials only as they are needed for production. This inventory method is known as:

a) Just-in-time (JIT)

b) Safety stock

c) Push system

d) Periodic review system

Question 8: When an item’s demand is generated directly from the production process of another item, it is referred to as:

a) Independent demand

b) Derived demand

c) Dependent demand

d) Fluctuating demand

Question 9: Which model includes strategies like vendor managed inventory to improve inventory control and reduce stock-outs at the retailer’s end?

a) Economic Order Quantity (EOQ)

b) Vendor Managed Inventory (VMI)

c) Aggregate planning

d) Periodic review system

Question 10: In a pull system, materials are moved through the production process:

a) Based on a set schedule

b) As they are needed

c) Once they reach maximum inventory levels

d) According to a forecast

Question 11: In which situation would backward vertical integration most likely provide a strategic advantage?

a) A company wants more control over distribution channels

b) A company seeks to ensure a steady supply of raw materials

c) A company aims to outsource production

d) A company wants to expand its retail presence

Question 12: What is the primary focus of lean supply chain members?

a) Increasing production speed

b) Minimizing costs and inventory

c) Maximizing flexibility

d) Developing high product variation

Question 13: A process bottleneck is identified as the stage that:

a) Requires the shortest processing time

b) Has the least variation in output

c) Holds back production due to limited capacity

d) Consistently meets production targets

Question 14: Which of the following describes the concept of "chase demand"?

a) Building up inventory to meet demand spikes

b) Adjusting production rates to match demand fluctuations

c) Reducing workforce to maintain stable output

d) Ignoring demand to focus on production efficiency

Question 15: A company decides to improve its logistics system by adopting technology that tracks shipments in real time. This improvement is primarily aimed at enhancing:

a) Cost control

b) Transparency and customer service

c) Product design

d) Quality control

Question 16: A situation in which a company uses the same equipment to produce a variety of products, thereby reducing costs, exemplifies:

a) Economies of scope

b) Economies of scale

c) Just-in-time production

d) Product standardization

Question 17: A company that sets up dedicated product facilities for specific markets, ensuring that each facility serves a distinct region, is following which strategy?

a) Regional facility strategy

b) Product facility strategy

c) Aggregate planning strategy

d) Location consolidation strategy

Question 18: When a manufacturer decides to simplify its assembly process by minimizing machine setup times, this is an example of applying:

a) Kanban principles

b) Lean principles

c) Agile methodology

d) Quality function deployment

Question 19: The primary objective of Total Quality Management (TQM) within an organization is to:

a) Focus solely on reducing costs

b) Improve product and service quality to meet customer expectations

c) Limit production to match demand

d) Maximize inventory turnover

Question 20: A company that places a representative from a supplier on-site to manage inventory and place orders for its products is utilizing which strategy?

a) Vendor Managed Inventory (VMI)

b) Third Party Logistics (3PL)

c) Just-in-Time II (JIT II)

d) Lead time reduction

Need Guaranteed Results?

Don't want to study? Our exam support service guarantees you'll pass your OA on the first attempt. Pay only after you pass!

Get Exam Support