MGSC 492 Actual Questions and Correct Answers
Q1
The "lifeblood" of the supply chain is Demand Management c. Operations Management Sales
and Operations Planning d. Inventory
Answer: inventory
Q2
Your order quantity is currently 1000. With better negotiations, your supplier agrees to an order
qty of 500. What is the difference in your average inventory? 500 c. 150 250 d. 450
Answer: 500/2=250
Q3
Assume you have 50 pieces in safety stock and each time an order is placed 1000 units is
ordered. What is the average inventory? 500 c. 450 550 d. 50
Answer: 1000/2+50= 550
Q4
1. True or False - Safety stock is used because of things that you can not plan for like
unforeseen changes in demand and supply. a. True b. False
Answer: true
Q5
If the annual cost of goods is $1,500,000 and the average inventory is $500,000, what is the
inventory turns? 2 c.3 4 d. 5
Answer: 1,500,000/500,000= 3
Q6
What would be the theoretical average inventory is a company had $2,000,000 in cost of good
sold and planned to turn the inventory 8 times. $150,000 c. $250,000 $25,000 d. $200,000
Answer: 2,000,000/8= 250,000
,Q7
A company has average inventory of $150,000. Thru better material management practices,
they are projecting an average inventory of $100,000. If the inventory carrying cost is 20%,
what is the annual savings the company will experience if they can reach their goal of
$100,000. $30,000 c. $10,000 $15,000 d . $20,000
Answer: 150,000-100,000= 50,000 50,000*.2= $10,000
Q8
In an ABC Analysis, typically the top 20% of your part numbers will amount to what percent of
your value? 20 % c. 45% 50% d. 80%
Answer: 80%
Q9
1. True or False - logistics represents between 8 and 18 percent of the gross domestic product
in countries a. True b. False
Answer: true
Q10
Companies with higher product value tend to have proportionally logistics cost than low product
value Higher c. similar Lower
Answer: lower
Q11
1. True or False - Perfect Order - a measure that attempts to account for all the main attributes
that go towards a completion of an order that Absolutely satisfied customer requirements. a.
True b. False
Answer: True
Q12
Which of the following requires the most protective packaging? Ocean and Air freight c. Air
freight and motor freight Ocean and rail freight d. Motor and rail freight
Answer: Ocean and rail freight
, Q13
Companies with low product value then to have proportionally logistics cost than high product
value. Lower c. Similar Higher
Answer: higher
Q14
All of the following would be used by a cost leader except: Maintaining low levels of inventory d.
paying overtime to expedite shipments High utilization of manufacturing and distribution assets
Offering a narrow range of services.
Answer: Paying overtime to expedite shipping
Q15
When customers return products in the supply chain, funds flow Left to right c. right to left Both
ways
Answer: left to right
Q16
When the product is sold without shipping included so customers may use their own fleets to
pick up the product is called - Factory Gate Pricing c. FOB the customer A service agreement d.
3pl logistics provider
Answer: factory gate pricing
Q17
All the following are reasons for an Agile Supply Chain except: The dramatic shortening of
product life cycles The rapid increase in the variety of the finished products The development in
direct selling and buying Loyal customers who buy repeatedly
Answer: loyal customers who buy repeatedly
Q18
A company wants to decrease the number of finished good part numbers stocked. One of the
things you would suggest is: Using postponement in the design of the product Reducing the
safety stock of finished goods across the board Delaying factory deliveries. Remove post
manufacturing activities currently happening at the distribution center.
Answer: use postponement in the design of the product
Q1
The "lifeblood" of the supply chain is Demand Management c. Operations Management Sales
and Operations Planning d. Inventory
Answer: inventory
Q2
Your order quantity is currently 1000. With better negotiations, your supplier agrees to an order
qty of 500. What is the difference in your average inventory? 500 c. 150 250 d. 450
Answer: 500/2=250
Q3
Assume you have 50 pieces in safety stock and each time an order is placed 1000 units is
ordered. What is the average inventory? 500 c. 450 550 d. 50
Answer: 1000/2+50= 550
Q4
1. True or False - Safety stock is used because of things that you can not plan for like
unforeseen changes in demand and supply. a. True b. False
Answer: true
Q5
If the annual cost of goods is $1,500,000 and the average inventory is $500,000, what is the
inventory turns? 2 c.3 4 d. 5
Answer: 1,500,000/500,000= 3
Q6
What would be the theoretical average inventory is a company had $2,000,000 in cost of good
sold and planned to turn the inventory 8 times. $150,000 c. $250,000 $25,000 d. $200,000
Answer: 2,000,000/8= 250,000
,Q7
A company has average inventory of $150,000. Thru better material management practices,
they are projecting an average inventory of $100,000. If the inventory carrying cost is 20%,
what is the annual savings the company will experience if they can reach their goal of
$100,000. $30,000 c. $10,000 $15,000 d . $20,000
Answer: 150,000-100,000= 50,000 50,000*.2= $10,000
Q8
In an ABC Analysis, typically the top 20% of your part numbers will amount to what percent of
your value? 20 % c. 45% 50% d. 80%
Answer: 80%
Q9
1. True or False - logistics represents between 8 and 18 percent of the gross domestic product
in countries a. True b. False
Answer: true
Q10
Companies with higher product value tend to have proportionally logistics cost than low product
value Higher c. similar Lower
Answer: lower
Q11
1. True or False - Perfect Order - a measure that attempts to account for all the main attributes
that go towards a completion of an order that Absolutely satisfied customer requirements. a.
True b. False
Answer: True
Q12
Which of the following requires the most protective packaging? Ocean and Air freight c. Air
freight and motor freight Ocean and rail freight d. Motor and rail freight
Answer: Ocean and rail freight
, Q13
Companies with low product value then to have proportionally logistics cost than high product
value. Lower c. Similar Higher
Answer: higher
Q14
All of the following would be used by a cost leader except: Maintaining low levels of inventory d.
paying overtime to expedite shipments High utilization of manufacturing and distribution assets
Offering a narrow range of services.
Answer: Paying overtime to expedite shipping
Q15
When customers return products in the supply chain, funds flow Left to right c. right to left Both
ways
Answer: left to right
Q16
When the product is sold without shipping included so customers may use their own fleets to
pick up the product is called - Factory Gate Pricing c. FOB the customer A service agreement d.
3pl logistics provider
Answer: factory gate pricing
Q17
All the following are reasons for an Agile Supply Chain except: The dramatic shortening of
product life cycles The rapid increase in the variety of the finished products The development in
direct selling and buying Loyal customers who buy repeatedly
Answer: loyal customers who buy repeatedly
Q18
A company wants to decrease the number of finished good part numbers stocked. One of the
things you would suggest is: Using postponement in the design of the product Reducing the
safety stock of finished goods across the board Delaying factory deliveries. Remove post
manufacturing activities currently happening at the distribution center.
Answer: use postponement in the design of the product
