Operations and Supply Chain Management:
Inventory, MRP, and EOQ Exam Questions
and Answers
1. What are the five activities of the SCOR model?
a. Plan, Source, Make, Deliver, Return
b. Buy, Manufacture, Ship, Sell, Return
c. Forecast, Produce, Store, Transport, Sell
d. Plan, Buy, Make, Market, Deliver
Answer: A
Explanation: The SCOR model defines five primary processes for supply chain
management: Plan, Source, Make, Deliver, and Return. These activities cover all aspects
of supply chain operations and provide a framework for performance measurement and
process improvement. Each activity is designed to ensure efficiency, cost-effectiveness,
and customer satisfaction.
2. Which of the following is a “right” in the less formal definition of purchasing?
a. Obtaining any materials available quickly
b. Obtaining the right materials, in the right quantity, at the right time, for delivery to the
right place
c. Buying the cheapest materials regardless of quality
d. Ordering materials only when stock is empty
Answer: B
Explanation: The “rights” in purchasing ensure that the organization gets the correct
materials at the appropriate time, in the correct quantity, and delivered to the right place.
This approach minimizes production delays and reduces costs associated with overstock
or stockouts. Ensuring these rights is a key responsibility of the purchasing function.
3. During WWII, what factor increased emphasis on purchasing?
a. Labor shortages
b. Materials shortages
c. Transportation challenges
d. High competition
Answer: B
Explanation: During World War II, materials shortages made purchasing critical to
ensure that factories and supply chains could continue operating. Procurement became
strategic as organizations had to secure scarce resources efficiently. This era highlighted
the importance of effective purchasing practices in supporting industrial output.
4. Purchasing savings can have a huge impact on the firm’s profit leverage. (True/False)
a. True
b. False
Answer: A
Explanation: Purchasing savings directly affect a company’s profit because reducing
costs increases the bottom line. Efficient sourcing and cost management allow firms to
, maximize profit without increasing sales. Even small percentage savings on large
expenditures can significantly improve profitability.
5. The strategic sourcing matrix is used to:
a. Track supplier deliveries
b. Segment purchases based on importance and market complexity
c. Determine employee incentives
d. Forecast demand
Answer: B
Explanation: The strategic sourcing matrix helps categorize purchases according to their
importance to the company and the complexity of the supply market. This segmentation
guides sourcing strategies and supplier management. High-value or complex purchases
require more careful management, while routine items can be handled efficiently.
6. During which era did outsourcing make purchasing strategic?
a. Industrial era
b. Strategic era
c. Transactional era
d. Operational era
Answer: B
Explanation: In the strategic era, outsourcing became a key element in purchasing
strategy. Firms began recognizing that external suppliers could provide specialized
capabilities at lower cost or higher quality. This shifted purchasing from a transactional
function to a strategic contributor to competitive advantage.
7. Leverage purchases are:
a. Items that are hard to source
b. Your best opportunity to save money and a buyer’s dream
c. Items purchased occasionally
d. Low-value, routine purchases
Answer: B
Explanation: Leverage items are purchases with high spend volume and many supplier
options. They provide significant opportunities for cost savings through negotiation and
competitive sourcing. Buyers focus on these items to achieve maximum financial impact
with minimal supply risk.
8. Bottleneck buys are:
a. Easy to source and manage
b. Items with many suppliers
c. Difficult to manage because there are few options
d. Purchased in large volumes
Answer: C
Explanation: Bottleneck items are those that are critical to production but have limited
supplier options. They pose a risk to supply continuity and require careful management.
Failing to secure these items can disrupt operations and increase costs.
9. A purchase where there are a large number of competitive suppliers and you buy a fairly
large amount relative to the market would most likely be classified as:
a. Bottleneck
b. Critical
c. Leverage
, d. Routine
Answer: C
Explanation: This describes a leverage item, where the buyer has negotiating power due
to the large purchase volume and availability of multiple suppliers. Leveraging these
conditions can result in significant cost savings. Proper management of leverage items is
essential for profitability.
10. Critical items on the strategic sourcing matrix are:
a. Low-volume, low-impact items
b. Also called strategic items
c. Purchased only occasionally
d. Easy to replace
Answer: B
Explanation: Critical items are also known as strategic items because they are both high
in value and high in supply risk. Managing these items carefully ensures product quality
and continuity. Firms often form close partnerships with suppliers for critical items to
reduce risks and enable collaboration.
11. Which of the following is not a step in the strategic sourcing process?
a. Plan
b. Analyze
c. Source
d. Procure
Answer: A
Explanation: Planning is a preliminary activity but not formally considered a step in the
strategic sourcing process. The main steps include analyzing spend, sourcing suppliers,
and procuring items. Following these steps ensures efficient and strategic purchasing
decisions.
12. Supplier segmentation using the strategic sourcing matrix occurs during which step of the
strategic sourcing process?
a. Plan
b. Analyze
c. Source
d. Procure
Answer: B
Explanation: Supplier segmentation is done during the analyze step, where purchases are
categorized based on strategic importance and supply complexity. This helps determine
the appropriate sourcing strategy and resource allocation. Segmentation ensures that
high-impact items receive the attention they require.
13. During which step of the strategic sourcing process would you identify potential
suppliers?
a. Plan
b. Analyze
c. Source
d. Procure
Answer: C
Explanation: The sourcing step involves identifying and evaluating potential suppliers to
meet the organization’s needs. This step ensures that suppliers are capable, reliable, and
, cost-effective. Effective sourcing sets the foundation for successful procurement and
supplier relationships.
14. When it comes to negotiations, it is important to know that:
a. Price is the only factor
b. Knowledge is power
c. Threats work best
d. Timing is irrelevant
Answer: B
Explanation: Knowledge about suppliers, market conditions, and cost structures is crucial
for successful negotiation. Well-informed buyers can leverage information to secure
better pricing and terms. Understanding supplier capabilities also helps build stronger,
long-term relationships.
15. During which step of the strategic sourcing process do you actually purchase items you
have contracted for?
a. Plan
b. Analyze
c. Source
d. Procure
Answer: D
Explanation: The procure step involves executing the purchase agreements with
suppliers. This step ensures that items are delivered as contracted and that the
organization meets production or operational needs. Procurement also monitors
compliance with contract terms.
16. A strategic alliance is most likely in which spend category?
a. Routine
b. Leverage
c. Critical
d. Bottleneck
Answer: C
Explanation: Strategic alliances are typically formed with critical items that have high
importance and supply risk. Close collaboration with suppliers helps ensure quality,
innovation, and reliable delivery. Alliances create mutual value and long-term benefits
for both buyer and supplier.
17. Reasons for early supplier involvement (ESI) include:
a. To reduce purchasing staff
b. To utilize the supplier's innovative ideas and because most cost and functionality is
determined during design
c. To outsource all production
d. To delay production schedules
Answer: B
Explanation: ESI allows suppliers to contribute their expertise early in product design.
Their input can improve cost efficiency, functionality, and manufacturability. Early
collaboration reduces risks and enhances innovation across the supply chain.
18. Potential supplier contributions from ESI include:
a. Hiring new staff
b. Providing feedback on feasibility, suggesting alternatives, improving cost and lead
Inventory, MRP, and EOQ Exam Questions
and Answers
1. What are the five activities of the SCOR model?
a. Plan, Source, Make, Deliver, Return
b. Buy, Manufacture, Ship, Sell, Return
c. Forecast, Produce, Store, Transport, Sell
d. Plan, Buy, Make, Market, Deliver
Answer: A
Explanation: The SCOR model defines five primary processes for supply chain
management: Plan, Source, Make, Deliver, and Return. These activities cover all aspects
of supply chain operations and provide a framework for performance measurement and
process improvement. Each activity is designed to ensure efficiency, cost-effectiveness,
and customer satisfaction.
2. Which of the following is a “right” in the less formal definition of purchasing?
a. Obtaining any materials available quickly
b. Obtaining the right materials, in the right quantity, at the right time, for delivery to the
right place
c. Buying the cheapest materials regardless of quality
d. Ordering materials only when stock is empty
Answer: B
Explanation: The “rights” in purchasing ensure that the organization gets the correct
materials at the appropriate time, in the correct quantity, and delivered to the right place.
This approach minimizes production delays and reduces costs associated with overstock
or stockouts. Ensuring these rights is a key responsibility of the purchasing function.
3. During WWII, what factor increased emphasis on purchasing?
a. Labor shortages
b. Materials shortages
c. Transportation challenges
d. High competition
Answer: B
Explanation: During World War II, materials shortages made purchasing critical to
ensure that factories and supply chains could continue operating. Procurement became
strategic as organizations had to secure scarce resources efficiently. This era highlighted
the importance of effective purchasing practices in supporting industrial output.
4. Purchasing savings can have a huge impact on the firm’s profit leverage. (True/False)
a. True
b. False
Answer: A
Explanation: Purchasing savings directly affect a company’s profit because reducing
costs increases the bottom line. Efficient sourcing and cost management allow firms to
, maximize profit without increasing sales. Even small percentage savings on large
expenditures can significantly improve profitability.
5. The strategic sourcing matrix is used to:
a. Track supplier deliveries
b. Segment purchases based on importance and market complexity
c. Determine employee incentives
d. Forecast demand
Answer: B
Explanation: The strategic sourcing matrix helps categorize purchases according to their
importance to the company and the complexity of the supply market. This segmentation
guides sourcing strategies and supplier management. High-value or complex purchases
require more careful management, while routine items can be handled efficiently.
6. During which era did outsourcing make purchasing strategic?
a. Industrial era
b. Strategic era
c. Transactional era
d. Operational era
Answer: B
Explanation: In the strategic era, outsourcing became a key element in purchasing
strategy. Firms began recognizing that external suppliers could provide specialized
capabilities at lower cost or higher quality. This shifted purchasing from a transactional
function to a strategic contributor to competitive advantage.
7. Leverage purchases are:
a. Items that are hard to source
b. Your best opportunity to save money and a buyer’s dream
c. Items purchased occasionally
d. Low-value, routine purchases
Answer: B
Explanation: Leverage items are purchases with high spend volume and many supplier
options. They provide significant opportunities for cost savings through negotiation and
competitive sourcing. Buyers focus on these items to achieve maximum financial impact
with minimal supply risk.
8. Bottleneck buys are:
a. Easy to source and manage
b. Items with many suppliers
c. Difficult to manage because there are few options
d. Purchased in large volumes
Answer: C
Explanation: Bottleneck items are those that are critical to production but have limited
supplier options. They pose a risk to supply continuity and require careful management.
Failing to secure these items can disrupt operations and increase costs.
9. A purchase where there are a large number of competitive suppliers and you buy a fairly
large amount relative to the market would most likely be classified as:
a. Bottleneck
b. Critical
c. Leverage
, d. Routine
Answer: C
Explanation: This describes a leverage item, where the buyer has negotiating power due
to the large purchase volume and availability of multiple suppliers. Leveraging these
conditions can result in significant cost savings. Proper management of leverage items is
essential for profitability.
10. Critical items on the strategic sourcing matrix are:
a. Low-volume, low-impact items
b. Also called strategic items
c. Purchased only occasionally
d. Easy to replace
Answer: B
Explanation: Critical items are also known as strategic items because they are both high
in value and high in supply risk. Managing these items carefully ensures product quality
and continuity. Firms often form close partnerships with suppliers for critical items to
reduce risks and enable collaboration.
11. Which of the following is not a step in the strategic sourcing process?
a. Plan
b. Analyze
c. Source
d. Procure
Answer: A
Explanation: Planning is a preliminary activity but not formally considered a step in the
strategic sourcing process. The main steps include analyzing spend, sourcing suppliers,
and procuring items. Following these steps ensures efficient and strategic purchasing
decisions.
12. Supplier segmentation using the strategic sourcing matrix occurs during which step of the
strategic sourcing process?
a. Plan
b. Analyze
c. Source
d. Procure
Answer: B
Explanation: Supplier segmentation is done during the analyze step, where purchases are
categorized based on strategic importance and supply complexity. This helps determine
the appropriate sourcing strategy and resource allocation. Segmentation ensures that
high-impact items receive the attention they require.
13. During which step of the strategic sourcing process would you identify potential
suppliers?
a. Plan
b. Analyze
c. Source
d. Procure
Answer: C
Explanation: The sourcing step involves identifying and evaluating potential suppliers to
meet the organization’s needs. This step ensures that suppliers are capable, reliable, and
, cost-effective. Effective sourcing sets the foundation for successful procurement and
supplier relationships.
14. When it comes to negotiations, it is important to know that:
a. Price is the only factor
b. Knowledge is power
c. Threats work best
d. Timing is irrelevant
Answer: B
Explanation: Knowledge about suppliers, market conditions, and cost structures is crucial
for successful negotiation. Well-informed buyers can leverage information to secure
better pricing and terms. Understanding supplier capabilities also helps build stronger,
long-term relationships.
15. During which step of the strategic sourcing process do you actually purchase items you
have contracted for?
a. Plan
b. Analyze
c. Source
d. Procure
Answer: D
Explanation: The procure step involves executing the purchase agreements with
suppliers. This step ensures that items are delivered as contracted and that the
organization meets production or operational needs. Procurement also monitors
compliance with contract terms.
16. A strategic alliance is most likely in which spend category?
a. Routine
b. Leverage
c. Critical
d. Bottleneck
Answer: C
Explanation: Strategic alliances are typically formed with critical items that have high
importance and supply risk. Close collaboration with suppliers helps ensure quality,
innovation, and reliable delivery. Alliances create mutual value and long-term benefits
for both buyer and supplier.
17. Reasons for early supplier involvement (ESI) include:
a. To reduce purchasing staff
b. To utilize the supplier's innovative ideas and because most cost and functionality is
determined during design
c. To outsource all production
d. To delay production schedules
Answer: B
Explanation: ESI allows suppliers to contribute their expertise early in product design.
Their input can improve cost efficiency, functionality, and manufacturability. Early
collaboration reduces risks and enhances innovation across the supply chain.
18. Potential supplier contributions from ESI include:
a. Hiring new staff
b. Providing feedback on feasibility, suggesting alternatives, improving cost and lead
