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Quizzes > Quizzes for Business > Business

Supply Chain and Inventory Management Concepts Quiz

Test Your Logistics and Stock Control Knowledge

Difficulty: Moderate
Questions: 20
Learning OutcomesStudy Material
Colorful paper art depicting elements of supply chain and inventory management for a quiz

Ready to measure your grasp of supply chain and inventory control? This Supply Chain and Inventory Management Concepts Quiz offers 15 multiple-choice questions designed for students, professionals, and educators keen on logistics and stock management. After finishing, you can try the Inventory Management Aptitude Test or the ERP Supply Chain Configuration Quiz for deeper insight. Everyone can freely modify questions and answers in our editor to suit specific learning objectives. Explore more quizzes to expand your knowledge base.

Which entity is the first stage in a typical supply chain?
Supplier
Manufacturer
Retailer
Distributor
Suppliers are the starting point in a supply chain, providing raw materials or components. All other stages depend on the supplier's inputs.
Which inventory control technique classifies items into categories based on their value and usage?
ABC analysis
Just-in-time (JIT)
Economic Order Quantity (EOQ)
FIFO method
ABC analysis segments inventory into categories A, B, and C according to value and usage frequency. This helps prioritize management effort on the most important items.
Which demand forecasting method uses the average of a fixed number of past periods to predict future demand?
Exponential smoothing
Delphi method
Simple moving average
Regression analysis
The simple moving average takes the mean of a set number of past demands to forecast the next period. It smooths out fluctuations by giving equal weight to each period.
Which KPI measures the percentage of orders delivered complete and on schedule?
Perfect order rate
Inventory turnover
Lead time
Order cycle time
The perfect order rate tracks the proportion of orders delivered without errors, on time, and in full. It reflects both speed and accuracy in order fulfillment.
If daily demand is 10 units and lead time is 5 days, what is the reorder point without safety stock?
5 units
100 units
50 units
15 units
Reorder point is calculated as daily demand multiplied by lead time, so 10 units/day × 5 days = 50 units. No safety stock is included.
Which stage of the supply chain involves converting raw materials into finished goods?
Manufacturing
Sourcing
Customer service
Distribution
Manufacturing is the transformation stage where raw materials are processed into finished products. This stage adds value through production processes.
Using the Economic Order Quantity (EOQ) model, which formula calculates EOQ?
√(2DH/S)
(D×S)/(2H)
2DS/H
√(2DS/H)
The EOQ formula is the square root of (2 × annual demand × ordering cost) divided by the holding cost. It balances ordering and holding costs.
Which inventory control practice involves counting a small subset of inventory in rotation to maintain accuracy?
Full physical inventory
Cycle counting
Spot checking
RFID tagging
Cycle counting schedules periodic counts of portions of inventory to identify and correct discrepancies. It avoids the downtime of full physical inventories.
Which forecasting technique applies a constant smoothing factor to update previous forecasts?
Linear regression
Simple moving average
Zero-based forecasting
Exponential smoothing
Exponential smoothing updates forecasts by weighting the most recent actual demand with a smoothing constant. It captures trends with minimal data requirements.
What does the KPI 'inventory turnover ratio' measure?
Average days inventory held
Number of times inventory is sold and replaced
Order fulfillment cycle time
Perfect order rate
Inventory turnover ratio shows how frequently inventory is sold and replenished over a period. It indicates efficiency in inventory management.
Given annual demand of 10,000 units, ordering cost of $50 per order, and holding cost of $2 per unit per year, what is the EOQ?
500 units
1,000 units
1,581 units
707 units
EOQ = √(2×10,000×50/2) = √500,000 ≈ 707 units. This quantity minimizes total ordering and holding costs.
Which safety stock calculation accounts for variability in demand and lead time?
Safety stock = average demand × lead time
Safety stock = z × σ_d × √(LT)
Safety stock = EOQ/2
Safety stock = reorder point − demand
The formula z × σ_d × √(LT) uses demand variability (σ_d), lead time, and a service level factor (z) to set safety stock. It addresses both uncertainty and target service.
What phenomenon describes demand variability amplification up the supply chain?
Cross-docking
Demand shaping
Bullwhip effect
Lean manufacturing
The bullwhip effect refers to increasing demand variability as orders move upstream. Small changes at the customer level can cause large swings for suppliers.
A company wants to maintain a 95% service level. Which component must be included in the reorder point calculation?
Annual demand
Order lead time
Safety stock
Economic order quantity
Safety stock is added to the basic reorder point calculation to achieve a target service level. It protects against demand and lead time variability.
Which demand is considered dependent demand?
Demand for tires by an automobile manufacturer
Demand for replacement parts in aftermarket
Demand for finished goods by retailers
Demand for service contracts
Dependent demand is driven by the production schedule of a parent item, such as tires needed for car assembly. It depends directly on manufacturing plans.
What collaborative process integrates forecasting and replenishment between supply chain partners?
Collaborative Planning, Forecasting, and Replenishment (CPFR)
Enterprise Resource Planning (ERP)
Sales and Operations Planning (S&OP)
Material Requirements Planning (MRP)
CPFR is a process where supply chain partners share forecasts and replenish collaboratively. It improves visibility and reduces bullwhip effects.
In an EOQ model with quantity discounts, what additional factor must be evaluated?
Discount breakpoints and total cost trade-offs
Safety stock levels
Lead time variability
Service level requirements
Quantity discounts introduce price breaks, so you must analyze total cost (ordering, holding, purchase) at each discount breakpoint. The lowest-cost lot size may be above the basic EOQ.
Which forecasting method uses cause-and-effect relationships between variables?
Judgmental forecasting
Time series analysis
Delphi method
Causal modeling
Causal models, such as regression, link demand to external factors like price or advertising. They identify how changes in inputs drive demand variations.
Which KPI captures the percentage of orders completed without errors across all metrics?
Perfect order fulfillment
Return rate
Order cycle time
Fill rate
Perfect order fulfillment measures the share of orders delivered on time, in full, undamaged, and with correct documentation. It reflects comprehensive performance.
In a multi-echelon inventory system, what is the primary goal?
Minimize total holding costs across all locations
Simplify supplier lead times
Maximize performance of a single warehouse
Increase order frequency
Multi-echelon inventory optimization seeks to reduce overall system costs by coordinating inventory levels across all locations. It balances service and cost at each echelon.
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Learning Outcomes

  1. Analyse supply chain stages to optimise flow
  2. Evaluate inventory control techniques for cost reduction
  3. Master demand forecasting methods for stock planning
  4. Identify key performance indicators in logistics management
  5. Demonstrate best practices in reorder point calculations
  6. Apply economic order quantity models to real scenarios

Cheat Sheet

  1. Understand the stages of a supply chain - Picture raw materials bouncing down a conveyor belt, turning into finished goods, and finally landing in happy customers' hands. By mapping procurement, production, transportation, and distribution, you'll spot bottlenecks and opportunities to speed things up. This bird's-eye view is your secret weapon for supply chain mastery. CliffsNotes Study Guide
  2. Master the Economic Order Quantity (EOQ) model - The EOQ formula is like a magic equation that balances ordering costs and holding expenses so you don't overbuy or run dry. By calculating the perfect order size, you keep inventory lean and your wallets happy. Crunching those numbers is your ticket to cost-effective inventory management. Imarticus Blog: EOQ Essentials
  3. Implement Just-In-Time (JIT) inventory systems - JIT is all about ninja-level timing: you order goods only as they're needed, slashing waste and storage fees. Strong supplier friendships are essential because delays can bring your whole operation to a screeching halt. Nail this, and your production line flows like clockwork. Fiveable: JIT Strategies
  4. Utilize ABC inventory classification - Think of your inventory like a VIP list: Class A items deserve top billing, B gets moderate attention, and C are the wallflowers. This categorization helps you focus resources where they matter most and avoid overcaring for low-impact stock. Prioritizing this way maximizes efficiency. Fiveable: ABC Classification
  5. Calculate safety stock levels - Safety stock is your backup dancer, stepping in when demand spikes or deliveries are late. By analyzing lead time and demand variability, you keep just enough extra on hand to avoid the dreaded stockout. It's the cushion that keeps customers smiling. Fiveable: Safety Stock Guide
  6. Understand the Bullwhip Effect - Small demand changes at the customer end can whip upstream into giant swings of overstock or shortage. Recognizing this phenomenon helps you tighten communication and forecasting across the chain. The result? A smoother, more predictable flow of goods. Zephyrnet: Bullwhip Effect Explained
  7. Apply the Reorder Point (ROP) method - ROP tells you exactly when it's time to hit "order" so stockouts become ancient history. It factors in lead time and average demand to trigger replenishment right on schedule. Perfect timing keeps shelves stocked and stress levels low. Fiveable: Reorder Point Guide
  8. Explore Vendor Managed Inventory (VMI) - In VMI, suppliers take the wheel, managing your stock levels on-site so you can focus on growth. This teamwork approach cuts inventory costs and boosts service levels. It's like having a co-pilot for your inventory strategy. Fiveable: VMI Strategies
  9. Implement Continuous Improvement strategies - Lean, Kaizen, and Six Sigma aren't just buzzwords - they're your toolkit for chopping waste and boosting value. By continuously refining processes, you transform small tweaks into big wins over time. Keep improving, keep winning! Zephyrnet: Continuous Improvement
  10. Understand the Theory of Constraints (TOC) - TOC helps you spot the bottleneck that's slowing everything down - your system's weakest link. By strengthening or working around that constraint, you elevate the performance of the entire chain. It's the power move taught in "The Goal" by Eliyahu Goldratt. Zephyrnet: Theory of Constraints
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