SCM Strategic & Operational Exam With A+
Graded Solutions.
1. A retailer notices that a 2% change in consumer demand results in a 20% change in orders at
the factory.
Illustration: Think of a long whip; a tiny flick of the wrist (consumer) creates a massive,
uncontrolled wave at the tip (manufacturer).
This phenomenon is known as:
A) The Butterfly Effect
B) The Bullwhip Effect
C) Demand Elasticity
D) Supply Chain Variance
Correct Answer: B
2. A procurement manager evaluates a local supplier ($100/unit, 2-day lead time) against an
overseas supplier ($70/unit, 50-day lead time).
Illustration: An iceberg where the "Price" is the visible tip, but "Pipeline Inventory" and
"Stockout Risk" are hidden underwater.
What calculation should be used?
A) Unit Price Analysis
B) Total Cost of Ownership (TCO)
C) Gross Profit Margin
D) Net Present Value
Correct Answer: B
3. A computer manufacturer ships "generic" laptops to regional hubs and only installs the
specific keyboard language once a local order is received.
Illustration: A baker baking plain cakes and only adding the specific frosting (chocolate,
vanilla) when the customer walks in.
This strategy is:
A) Speculation
B) Postponement (Delayed Differentiation)
C) Lean Manufacturing
D) Vertical Integration
Correct Answer: B
4. In a distribution center, goods are moved directly from receiving to shipping with almost no
storage time.
Illustration: An airport terminal where passengers transfer between flights without ever
checking into a hotel.
This practice is:
A) Wave Picking
B) Cross-Docking
C) Zone Picking
D) Put-away
Correct Answer: B
5. If annual demand for a part doubles, but ordering and holding costs remain constant, how
does the Economic Order Quantity (EOQ) change?
, Illustration: A balanced scale; if the weight on the "Demand" side doubles, the "Order Size"
must adjust to find a new equilibrium.
A) It doubles
B) It increases by approximately 41%
C) It stays the same
D) It quadruples
Correct Answer: B
6. A smartphone company owns its own glass factory, chip assembly plant, and retail stores.
Illustration: A tree that grows its own soil and water supply rather than relying on the forest
ecosystem.
This is an example of:
A) Horizontal Integration
B) Vertical Integration
C) Outsourcing
D) Franchising
Correct Answer: B
7. A provider manages the entire supply chain design, data integration, and transportation for a
client.
Illustration: Moving from hiring a taxi driver (3PL) to hiring a travel agent who plans the
entire world tour (4PL).
This provider is a:
A) 1PL
B) 4PL (Lead Logistics Provider)
C) 3PL
D) Freight Forwarder
Correct Answer: B
8. A manager uses the 80/20 rule to find that 20% of items account for 80% of total value.
Illustration: A mountain range where a few massive peaks (A-items) carry more weight than
thousands of tiny pebbles (C-items).
What is this analysis?
A) VMI Analysis
B) ABC Analysis
C) SKU Rationalization
D) JIT Assessment
Correct Answer: B
9. A machine in a factory produces 50 units/hour, while all others produce 200. The entire
factory's output is limited to 50.
Illustration: The narrow neck of a bottle; the water only pours out as fast as the neck allows,
regardless of the bottle's size.
This machine is a:
A) Catalyst
B) Bottleneck
C) Buffer
D) Anchor
Correct Answer: B
, 10. A supply chain focuses on the absolute elimination of "Muda" (waste).
Illustration: A river where the water level (inventory) is lowered to reveal the jagged rocks
(process defects) at the bottom.
This philosophy is:
A) Agile
B) Lean
C) Resilient
D) Fragile
Correct Answer: B
11. A supplier monitors the retailer's inventory and automatically triggers replenishment.
Illustration: A bread delivery driver who checks the grocery store shelf and restocks it
himself without being asked.
This is known as:
A) JIT
B) VMI (Vendor Managed Inventory)
C) CPFR
D) Outsourcing
Correct Answer: B
12. A company measures the days it takes for a dollar spent on raw materials to return as cash
from a customer sale.
Illustration: A stopwatch that starts when you pay a supplier and stops when the customer’s
check clears.
This metric is:
A) Inventory Turnover
B) Cash-to-Cash Cycle Time
C) Return on Assets
D) Debt-to-Equity
Correct Answer: B
13. Parts are only moved to the next station when a signal is received from the "downstream"
worker.
Illustration: A relay race where the next runner only starts when they feel the baton in their
hand.
This "Pull" system is:
A) MRP
B) Kanban
C) ERP
D) Bottlenecking
Correct Answer: B
14. A firm maintains extra inventory to protect against unexpected demand spikes or supplier
delays.
Illustration: A spare tire in the trunk of a car; you hope you don't need it, but you're glad it's
there during a blowout.
This is:
A) Obsolete Stock
B) Safety Stock
Graded Solutions.
1. A retailer notices that a 2% change in consumer demand results in a 20% change in orders at
the factory.
Illustration: Think of a long whip; a tiny flick of the wrist (consumer) creates a massive,
uncontrolled wave at the tip (manufacturer).
This phenomenon is known as:
A) The Butterfly Effect
B) The Bullwhip Effect
C) Demand Elasticity
D) Supply Chain Variance
Correct Answer: B
2. A procurement manager evaluates a local supplier ($100/unit, 2-day lead time) against an
overseas supplier ($70/unit, 50-day lead time).
Illustration: An iceberg where the "Price" is the visible tip, but "Pipeline Inventory" and
"Stockout Risk" are hidden underwater.
What calculation should be used?
A) Unit Price Analysis
B) Total Cost of Ownership (TCO)
C) Gross Profit Margin
D) Net Present Value
Correct Answer: B
3. A computer manufacturer ships "generic" laptops to regional hubs and only installs the
specific keyboard language once a local order is received.
Illustration: A baker baking plain cakes and only adding the specific frosting (chocolate,
vanilla) when the customer walks in.
This strategy is:
A) Speculation
B) Postponement (Delayed Differentiation)
C) Lean Manufacturing
D) Vertical Integration
Correct Answer: B
4. In a distribution center, goods are moved directly from receiving to shipping with almost no
storage time.
Illustration: An airport terminal where passengers transfer between flights without ever
checking into a hotel.
This practice is:
A) Wave Picking
B) Cross-Docking
C) Zone Picking
D) Put-away
Correct Answer: B
5. If annual demand for a part doubles, but ordering and holding costs remain constant, how
does the Economic Order Quantity (EOQ) change?
, Illustration: A balanced scale; if the weight on the "Demand" side doubles, the "Order Size"
must adjust to find a new equilibrium.
A) It doubles
B) It increases by approximately 41%
C) It stays the same
D) It quadruples
Correct Answer: B
6. A smartphone company owns its own glass factory, chip assembly plant, and retail stores.
Illustration: A tree that grows its own soil and water supply rather than relying on the forest
ecosystem.
This is an example of:
A) Horizontal Integration
B) Vertical Integration
C) Outsourcing
D) Franchising
Correct Answer: B
7. A provider manages the entire supply chain design, data integration, and transportation for a
client.
Illustration: Moving from hiring a taxi driver (3PL) to hiring a travel agent who plans the
entire world tour (4PL).
This provider is a:
A) 1PL
B) 4PL (Lead Logistics Provider)
C) 3PL
D) Freight Forwarder
Correct Answer: B
8. A manager uses the 80/20 rule to find that 20% of items account for 80% of total value.
Illustration: A mountain range where a few massive peaks (A-items) carry more weight than
thousands of tiny pebbles (C-items).
What is this analysis?
A) VMI Analysis
B) ABC Analysis
C) SKU Rationalization
D) JIT Assessment
Correct Answer: B
9. A machine in a factory produces 50 units/hour, while all others produce 200. The entire
factory's output is limited to 50.
Illustration: The narrow neck of a bottle; the water only pours out as fast as the neck allows,
regardless of the bottle's size.
This machine is a:
A) Catalyst
B) Bottleneck
C) Buffer
D) Anchor
Correct Answer: B
, 10. A supply chain focuses on the absolute elimination of "Muda" (waste).
Illustration: A river where the water level (inventory) is lowered to reveal the jagged rocks
(process defects) at the bottom.
This philosophy is:
A) Agile
B) Lean
C) Resilient
D) Fragile
Correct Answer: B
11. A supplier monitors the retailer's inventory and automatically triggers replenishment.
Illustration: A bread delivery driver who checks the grocery store shelf and restocks it
himself without being asked.
This is known as:
A) JIT
B) VMI (Vendor Managed Inventory)
C) CPFR
D) Outsourcing
Correct Answer: B
12. A company measures the days it takes for a dollar spent on raw materials to return as cash
from a customer sale.
Illustration: A stopwatch that starts when you pay a supplier and stops when the customer’s
check clears.
This metric is:
A) Inventory Turnover
B) Cash-to-Cash Cycle Time
C) Return on Assets
D) Debt-to-Equity
Correct Answer: B
13. Parts are only moved to the next station when a signal is received from the "downstream"
worker.
Illustration: A relay race where the next runner only starts when they feel the baton in their
hand.
This "Pull" system is:
A) MRP
B) Kanban
C) ERP
D) Bottlenecking
Correct Answer: B
14. A firm maintains extra inventory to protect against unexpected demand spikes or supplier
delays.
Illustration: A spare tire in the trunk of a car; you hope you don't need it, but you're glad it's
there during a blowout.
This is:
A) Obsolete Stock
B) Safety Stock
