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C720 – Operations and Supply Chain
Management Questions and Correct Answers
ABC Analysis Ans: has been developed to determine which
inventory items should receive the highest level of control,
focusing efforts where the payoff is highest. The inventory
classifications are based upon the annual dollar usage of each
item.(p. 81)
Adjustment strategy Ans: used to add or reduce capacity in small
or large amounts as consumer demand or major changes to
product or system architecture occurs. (p. 46)
Aggregate planning Ans: is the combining of individual end items
into product groups or product families for planning purposes. It
is a medium range (6 - 18 months) statement of planned output by
product groups on a monthly basis. (p. 65 and p. 67)
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Agile Supply Chain Ans: is the use of responsiveness,
competency, flexibility, and quickness to manage how well a
supply chain entity operates on a daily basis and attempts to
assess the needs of its customers in great detail so it can provide
customized products that better meet the customer's expectations.
(p. 38)
Assembly line Ans: is used to describe the assembly of low-
variety, high volume discrete products. Product layout relatively
high fixed costs and relatively low variable costs Ex. Washing
machine assembly. (p. 54)
Available to Promise Ans: is used in master scheduling to
designate inventory that has not yet been sold. (p. 68)
Average Inventory Level Ans: is the formula that calculates the
amount of goods on hand at any given point. (p. 82) Average
Inventory = Q/2 where Q represents the quantity ordered each
time.
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Backward Vertical Integration Ans: is when a company owns the
supplier or supply process in the supply chain. (p. 38)
Batch flow processes Ans: address the product variations. Batch
flow is a term used to describe a production process that
aggregates similar products together to generate sufficient volume
for efficient use in a facility. (p. 54)
Benchmarking Ans: is a process by which a company compares
its performance to the performance of other companies who need
not be competitors, nor be within the same industry. The purpose
of benchmarking is to set a standard based upon the company that
is recognized as the best at a certain activity (p. 29)
Bill of materials (BOM) Ans: lists the materials needed and the
quantities of each to produce the finished product. Identifies how
many of each part goes into making one unit of a finished product.
(p. 62 and 68)
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Bottleneck Ans: is the most limiting constraint on the system. It
occurs at the point in the process that requires the longest time or
has the slowest rate (p. 39)
Buildup method (qualitative) Ans: requires starting at the bottom
of an organization and making an overall estimate by adding
together estimates from each element. (p. 63)
Business Process Ans: is a set of work activities with a preferred
order, an identifiable beginning and end, inputs, and clearly
defined outputs that add value to the customer. (p. 9)
Capacity Ans: is a measure of an organization's ability to
sustainably provide customers with the demanded services or
goods in the amount requested and in a timely manner, given
current resources. Capacity also describes an organization's
maximum sustainable rate of production. (p. 45)
© 2025 All rights reserved
C720 – Operations and Supply Chain
Management Questions and Correct Answers
ABC Analysis Ans: has been developed to determine which
inventory items should receive the highest level of control,
focusing efforts where the payoff is highest. The inventory
classifications are based upon the annual dollar usage of each
item.(p. 81)
Adjustment strategy Ans: used to add or reduce capacity in small
or large amounts as consumer demand or major changes to
product or system architecture occurs. (p. 46)
Aggregate planning Ans: is the combining of individual end items
into product groups or product families for planning purposes. It
is a medium range (6 - 18 months) statement of planned output by
product groups on a monthly basis. (p. 65 and p. 67)
© 2025 All rights reserved
, 2 | Page
Agile Supply Chain Ans: is the use of responsiveness,
competency, flexibility, and quickness to manage how well a
supply chain entity operates on a daily basis and attempts to
assess the needs of its customers in great detail so it can provide
customized products that better meet the customer's expectations.
(p. 38)
Assembly line Ans: is used to describe the assembly of low-
variety, high volume discrete products. Product layout relatively
high fixed costs and relatively low variable costs Ex. Washing
machine assembly. (p. 54)
Available to Promise Ans: is used in master scheduling to
designate inventory that has not yet been sold. (p. 68)
Average Inventory Level Ans: is the formula that calculates the
amount of goods on hand at any given point. (p. 82) Average
Inventory = Q/2 where Q represents the quantity ordered each
time.
© 2025 All rights reserved
, 3 | Page
Backward Vertical Integration Ans: is when a company owns the
supplier or supply process in the supply chain. (p. 38)
Batch flow processes Ans: address the product variations. Batch
flow is a term used to describe a production process that
aggregates similar products together to generate sufficient volume
for efficient use in a facility. (p. 54)
Benchmarking Ans: is a process by which a company compares
its performance to the performance of other companies who need
not be competitors, nor be within the same industry. The purpose
of benchmarking is to set a standard based upon the company that
is recognized as the best at a certain activity (p. 29)
Bill of materials (BOM) Ans: lists the materials needed and the
quantities of each to produce the finished product. Identifies how
many of each part goes into making one unit of a finished product.
(p. 62 and 68)
© 2025 All rights reserved
, 4 | Page
Bottleneck Ans: is the most limiting constraint on the system. It
occurs at the point in the process that requires the longest time or
has the slowest rate (p. 39)
Buildup method (qualitative) Ans: requires starting at the bottom
of an organization and making an overall estimate by adding
together estimates from each element. (p. 63)
Business Process Ans: is a set of work activities with a preferred
order, an identifiable beginning and end, inputs, and clearly
defined outputs that add value to the customer. (p. 9)
Capacity Ans: is a measure of an organization's ability to
sustainably provide customers with the demanded services or
goods in the amount requested and in a timely manner, given
current resources. Capacity also describes an organization's
maximum sustainable rate of production. (p. 45)
© 2025 All rights reserved
