SCM 300 Practice Exam 100 Questions with Answers and Rationales | Supply Chain Management Full Review Guide | PDF

SCM 300 Practice Exam 100 Questions with Answers
and Rationales | Supply Chain Management Full
Review Guide | PDF

Question 1
A company wants to minimize total inventory costs while avoiding stockouts. Which model is
most appropriate for determining the optimal order quantity?
A. Forecasting model
B. Economic Order Quantity (EOQ) model
C. Regression model
D. Linear programming model
Correct Answer: B
*️⃣ EOQ is used to find the optimal order quantity that minimizes total ordering and holding
costs under stable demand conditions.


Question 2
Which of the following best describes safety stock?
A. Inventory held to meet exact demand forecasts
B. Extra inventory kept to prevent stockouts due to uncertainty
C. Inventory ordered only when demand is zero
D. Finished goods stored for long-term investment
Correct Answer: B
*️⃣ Safety stock is additional inventory maintained to protect against variability in demand or
supply delays.


Question 3
Which forecasting method uses past data points equally weighted over time?

,A. Moving average
B. Exponential smoothing
C. Linear regression
D. Causal forecasting
Correct Answer: A
*️⃣ Moving average forecasting assigns equal importance to a fixed number of past periods to
smooth demand fluctuations.


Question 4
What happens to total inventory cost when order quantity increases in EOQ models?
A. Holding cost increases, ordering cost decreases
B. Both costs decrease
C. Holding cost decreases, ordering cost increases
D. Both costs increase
Correct Answer: A
*️⃣ Larger order quantities increase holding costs but reduce ordering frequency and ordering
costs.


Question 5
Which supply chain strategy focuses on minimizing waste and improving efficiency?
A. Agile system
B. Lean system
C. Responsive system
D. Push system
Correct Answer: B
*️⃣ Lean systems focus on eliminating waste, reducing inventory, and improving process
efficiency.


Question 6

,What is the main purpose of demand forecasting?
A. Increase production costs
B. Estimate future customer demand
C. Eliminate inventory
D. Reduce supplier involvement
Correct Answer: B
*️⃣ Forecasting helps businesses estimate future demand to make better production and
inventory decisions.


Question 7
Which inventory system continuously tracks inventory levels?
A. Periodic review system
B. Just-in-time system
C. Perpetual inventory system
D. Batch ordering system
Correct Answer: C
*️⃣ Perpetual inventory systems update stock levels in real time after each transaction.


Question 8
Which cost increases when inventory levels are too high?
A. Stockout cost
B. Ordering cost
C. Holding cost
D. Setup cost
Correct Answer: C
*️⃣ Holding costs increase due to storage, insurance, and capital tied up in inventory.


Question 9

, Which factor does NOT affect EOQ?
A. Demand rate
B. Ordering cost
C. Holding cost
D. Selling price
Correct Answer: D
*️⃣ EOQ focuses on ordering and holding costs, not product selling price.


Question 10
What is a key characteristic of Just-In-Time (JIT) systems?
A. Large safety stock levels
B. High inventory buffers
C. Minimal inventory levels
D. Random ordering schedules
Correct Answer: C
*️⃣ JIT systems aim to reduce inventory by receiving goods only when needed in production.


Question 11
Which type of forecast is based on expert opinions and judgment?
A. Quantitative forecasting
B. Causal forecasting
C. Qualitative forecasting
D. Time series forecasting
Correct Answer: C
*️⃣ Qualitative forecasting relies on expert judgment, intuition, and experience rather than
numerical data.


Question 12