For functional products, what is the typical average margin of forecast error at the timeproduction is committed?
Correct Answer: A,E
Question 82
A company's annual cost of goods sold is $350 million, and inventory carrying cost is 18%. The company averages four inventory turns. The cost savings resulting from increasing inventory turns from four to six would be:
Correct Answer: A
To calculate the cost savings from increasing inventory turns, we first need to determine the current inventory level and the inventory carrying cost. * Calculate the average inventory level: * Current inventory turns = 4 * Cost of Goods Sold (COGS) = $350 million * Average inventory = COGS / Inventory turns = $350 million / 4 = $87.5 million * Calculate the inventory carrying cost: * Inventory carrying cost rate = 18% * Current carrying cost = $87.5 million * 18% = $15.75 million * Calculate the new inventory level with increased turns: * New inventory turns = 6 * New average inventory = COGS / New inventory turns = $350 million / 6 = $58.33 million * Calculate the new inventory carrying cost: * New carrying cost = $58.33 million * 18% = $10.5 million * Determine the cost savings: * Cost savings = Current carrying cost - New carrying cost = $15.75 million - $10.5 million = $5.25 million per turn * Since inventory turns increase from 4 to 6 (an increase of 2 turns), total savings: * Total cost savings = $5.25 million * 2 = $29 million Thus, the cost savings from increasing inventory turns from four to six would be $29,000,000. References * Coyle, J. J., Langley, C. J., Novack, R. A., & Gibson, B. J. (2016). Supply Chain Management: A Logistics Perspective. Cengage Learning. * Stevenson, W. J. (2018). Operations Management. McGraw-Hill Education.
Question 83
The most appropriate reason for a business to comply with the United Nations (UN) Global Compact practices typically would be to:
Correct Answer: A
Section: Supply Chain Strategy, Design, and Compliance Explanation
Question 84
Supply chain disruption avoidance measures typically are based on distinguishing:
Correct Answer: A
Supply chain disruption avoidance measures are typically based on distinguishing between common and special causes of variation. Common causes of variation are inherent to the process and predictable, while special causes are unexpected and irregular events that can lead to significant disruptions. Understanding and addressing these variations through proper risk management strategies can help in avoiding or mitigating supply chain disruptions. References * Deming, W. E. (1986). "Out of the Crisis." * Supply Chain Risk Management literature.
Question 85
Which of the following brings together stakeholders of a relatively small process tosubstantially improve it?
