MGSC 492 Actual Questions and Correct Answers
Q1
The "lifeblood" of the supply chain is: Demand Management Sales and operations planning
Operations Management Inventory
Answer: D. 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? A. 500 B. 250 C. 150 D. 450
Answer: B. 250
Q3
Assume you have 50 pieces in safety stock and each time an order is placed 1,000 units is
ordered. What is your average inventory? A. 500 B. 550 C. 450 D. 50
Answer: B. 550
Q4
True or False - Safety stock is used because of things that you cannot plan for like unforeseen
changes in demand and supply
Answer: A. True
Q5
If the annual cost of goods is $1,500,000 and the average inventory is $500,000, what is the
inventory turns? A. 2 B. 4 C. 3 D. 5
Answer: C. 3
Q6
What would be the theoretical average inventory if a company had $2,000,000 in cost of goods
sold and planned to turn the inventory 8 times. $150,000 $25,000 $250,000 $200,000
Answer: C. $250,000
,Q7
A company has average inventory of $150,000. Thru better 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
$15,000 $10,000 $20,000
Answer: C. $10,000
Q8
In an ABC Analysis, typically the top 20% of your part numbers will amount to what percent of
your value? A. 20% B. 50% C. 45% D. 80%
Answer: D. 80%
Q9
True or False - logistics represents between 8 and 18 percent of the gross domestic product in
countries.
Answer: A. True
Q10
Companies with higher product value tend to have proportionally logistics cost than low product
value. A. Higher B. Lower C. Similiar
Answer: B. Lower
Q11
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.
Answer: A. True
Q12
Which of the following require the most protective packaging? Ocean and Air Freight Ocean and
Rail Freight Air Freight and Motor Freight Motor and Rail Freight
Answer: B. Ocean and Rail Freight
, Q13
Companies with low product value tend to have proportionally logistics cost than high product
value. A. Lower B. Higher C. Similar
Answer: B. Higher
Q14
All of the following would be used by a cost leader except: A. Maintaining low levels of inventory
B. High utilization of manufacturing and distribution assets C. Offering a narrow range of
services D. Paying overtime to expedite shipments
Answer: D. Paying overtime to expedite shipments
Q15
When customers return products in the supply chain, funds flow Left to right Both ways Right to
left
Answer: A. Left to right
Q16
When the product is sold without shipping included so customers may use their own fleet to
pick up the product is called- Factory Gate Pricing A service agreement FOB the customer 3pl
logistics provider
Answer: A. Factory Gate Pricing
Q17
All of 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: D. 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: A. Using postponement in the design of the product.
Q1
The "lifeblood" of the supply chain is: Demand Management Sales and operations planning
Operations Management Inventory
Answer: D. 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? A. 500 B. 250 C. 150 D. 450
Answer: B. 250
Q3
Assume you have 50 pieces in safety stock and each time an order is placed 1,000 units is
ordered. What is your average inventory? A. 500 B. 550 C. 450 D. 50
Answer: B. 550
Q4
True or False - Safety stock is used because of things that you cannot plan for like unforeseen
changes in demand and supply
Answer: A. True
Q5
If the annual cost of goods is $1,500,000 and the average inventory is $500,000, what is the
inventory turns? A. 2 B. 4 C. 3 D. 5
Answer: C. 3
Q6
What would be the theoretical average inventory if a company had $2,000,000 in cost of goods
sold and planned to turn the inventory 8 times. $150,000 $25,000 $250,000 $200,000
Answer: C. $250,000
,Q7
A company has average inventory of $150,000. Thru better 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
$15,000 $10,000 $20,000
Answer: C. $10,000
Q8
In an ABC Analysis, typically the top 20% of your part numbers will amount to what percent of
your value? A. 20% B. 50% C. 45% D. 80%
Answer: D. 80%
Q9
True or False - logistics represents between 8 and 18 percent of the gross domestic product in
countries.
Answer: A. True
Q10
Companies with higher product value tend to have proportionally logistics cost than low product
value. A. Higher B. Lower C. Similiar
Answer: B. Lower
Q11
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.
Answer: A. True
Q12
Which of the following require the most protective packaging? Ocean and Air Freight Ocean and
Rail Freight Air Freight and Motor Freight Motor and Rail Freight
Answer: B. Ocean and Rail Freight
, Q13
Companies with low product value tend to have proportionally logistics cost than high product
value. A. Lower B. Higher C. Similar
Answer: B. Higher
Q14
All of the following would be used by a cost leader except: A. Maintaining low levels of inventory
B. High utilization of manufacturing and distribution assets C. Offering a narrow range of
services D. Paying overtime to expedite shipments
Answer: D. Paying overtime to expedite shipments
Q15
When customers return products in the supply chain, funds flow Left to right Both ways Right to
left
Answer: A. Left to right
Q16
When the product is sold without shipping included so customers may use their own fleet to
pick up the product is called- Factory Gate Pricing A service agreement FOB the customer 3pl
logistics provider
Answer: A. Factory Gate Pricing
Q17
All of 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: D. 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: A. Using postponement in the design of the product.
