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NEW QUESTION # 12
A low-cost provider strategy works best when which of the following conditions are met?

• A. Price competition among rivals is similar.
• B. There are few industry newcomers.
• C. Buyers are more price sensitive.
• D. There are many ways to achieve product differentiation.

Answer: C

Explanation:
A low-cost provider strategy is a business strategy where a company aims to become the most cost-efficient player in its industry, often by producing goods or providing services at a lower cost than its competitors. The overall goal is to increase market share or achieve higher profitability. The low-cost leader in an industry often sets the price that other companies have to match or beat to stay competitive12.
A low-cost provider strategy works best when buyers are more price sensitive, meaning they are more likely to switch to cheaper alternatives if the price of a product or service increases. This condition creates a strong demand for low-priced products or services, and gives the low-cost leader a competitive advantage over rivals who have higher costs and prices. Buyers are more price sensitive when34:
*The product or service is standardized or undifferentiated, and there are few switching costs.
*The product or service represents a significant portion of the buyer's budget or income.
*The product or service has low quality, performance, or image attributes that limit the buyer's satisfaction or loyalty.
*The product or service is not crucial to the buyer's well-being or enjoyment.
The other options are not correct because:
*A. Price competition among rivals is similar. This condition does not favor a low-cost provider strategy, because it implies that the industry is already highly competitive and there is little room for differentiation. A low-cost leader would have to lower its prices even further to gain an edge over rivals, which could erode its profitability and sustainability.
*C. There are many ways to achieve product differentiation. This condition does not favor a low-cost provider strategy, because it implies that the industry is diverse and dynamic, and there are many opportunities for innovation and value creation. A low-cost leader would have to invest more in research and development, marketing, and customer service to keep up with the changing customer preferences and expectations, which could increase its costs and reduce its efficiency.
*D. There are few industry newcomers. This condition does not favor a low-cost provider strategy, because it implies that the industry is mature and stable, and there are few threats from new entrants. A low-cost leader would have to rely on its existing customer base and market share, which could limit its growth potential and expose it to the risk of obsolescence.
References := 1 Low-cost leadership strategy: Explained with examples2 2 Low-Cost Producer: Definition, Strategies, Examples - Investopedia4 3 Low Cost Strategy - Definition, Factors & Example - MBA Skool5 4 Generating Advantage - Strategic Management - Open Educational Resources1

NEW QUESTION # 13
Components of an organization's Immediate industry and competitive environment Include:

• A. substitute products.
• B. sociocultural forces.
• C. interest rates.
• D. political factors.

Answer: A

Explanation:
Substitute products are components of an organization's immediate industry and competitive environment.
They are products or services that can satisfy the same customer needs or wants as the organization's offerings, but are provided by different industries or markets. Substitute products can affect the demand, price, and profitability of the organization's products, and require the organization to monitor and respond to the changes in customer preferences and competitive pressures. Political factors, interest rates, and sociocultural forces are examples of macroenvironmental factors, which are broader and more general forces that affect the organization and its industry, but are not directly related to its competitors or customers. References := CPIM Exam Content Manual, Module 1: Supply Chains and Strategy, Section 1.1: Business Strategy, p.
4
Strategic Supply Chain Management: The Five Core Disciplines for Top Performance, Chapter 2: Align Your Supply Chain with Business Strategy, Section 2.2: Assessing the External Environment, pp. 25-26

NEW QUESTION # 14
Which of the following tools is used to evaluate the impact that a production plan has on capacity?

• A. Bill of resources
• B. Product routing
• C. Demand time fence (DTF)
• D. Safety capacity

Answer: A

Explanation:
A bill of resources is a tool that lists the capacity requirements for each work center or resource group based on the planned production quantities. It is used to evaluate the impact that a production plan has on capacity by comparing the available capacity with the required capacity. A bill of resources can also help identify capacity bottlenecks, excess capacity, and alternative resources. A demand time fence(DTF) is a tool that defines the period of time in which the master production schedule (MPS) is frozen and cannot be changed by customer orders. A product routing is a tool that defines the sequence of operations and work centers required to produce a product. A safety capacity is a tool that provides a buffer against demand and supply uncertainty by adding extra capacity to the planned capacity. These tools are not directly used to evaluate the impact that a production plan has on capacity, although they may affect the capacity planning process. References: Bill of Resources | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

NEW QUESTION # 15
Which of the following product design approaches are likely to reduce time to market for a global supply chain?

• A. Design for logistics
• B. Quality function deployment (QFD)
• C. Design for manufacture
• D. Concurrent engineering

Answer: D

NEW QUESTION # 16
Which of the following measurements indicates there may be bias In the forecast model?

• A. Standard deviation
• B. Variance
• C. Mean absolute deviation (MAD)
• D. Tracking signal

Answer: D

Explanation:
The tracking signal is a measurement that indicates there may be bias in the forecast model. The tracking signal is the ratio of the cumulative forecast error to the mean absolute deviation (MAD). It measures how well the forecast is tracking the actual demand over time. A tracking signal of zero means that the forecast is perfectly accurate. A tracking signal within the range of -4 to +4 is considered acceptable. A tracking signal outside this range indicates that the forecast is consistently overestimating or underestimating the demand, which implies that there is bias in the forecast model. Bias is the tendency of a forecast to be consistently higher or lower than the actual demand. Bias can be caused by factors such as inaccurate data, inappropriate forecasting methods, or changes in demand patterns. References:
Managing Supply Chain Operations, Chapter 5: Demand Management and Forecasting, Section 5.2:
Forecasting Methods, Subsection 5.2.3: Forecast Accuracy and Control
CPIM Exam Content Manual, Module 3: Demand, Section 3.2: Forecasting, Subsection 3.2.2:
Forecasting Methods, Subsubsection 3.2.2.3: Forecast Accuracy and Control

NEW QUESTION # 17
A logistics manager Is faced with delivering an order via rail or truck. Shipping via rail costs S300 and takes
14 days. Shipping via truck costs $600 and takes 3 days. If the holding cost is $40 per day, what is the cost to deliver the order?

• A. $860for rail,$720 for truck
• B. $340for rail.$720 for truck
• C. $860for rail.$600 for truck
• D. $340for rail,$600 for truck

Answer: A

Explanation:
The cost to deliver the order consists of two components: the shipping cost and the holding cost. The shipping cost is the amount paid to the transportation mode for moving the order from the origin to the destination. The holding cost is the amount incurred for storing the order until it is delivered to the customer. The holding cost depends on the delivery time, which is the number of days it takes for the order to reach the customer. The longer the delivery time, the higher the holding cost. The shipping cost and the holding cost for each transportation mode are calculated as follows:
Shipping via rail:
Shipping cost = $300
Delivery time = 14 days
Holding cost = $40 x 14 = $560
Total cost = $300 + $560 = $860
Shipping via truck:
Shipping cost = $600
Delivery time = 3 days
Holding cost = $40 x 3 = $120
Total cost = $600 + $120 = $720
Therefore, the cost to deliver the order via rail is $860, and the cost to deliver the order via truck is $720.
References: Transportation Costing | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

NEW QUESTION # 18
One of the most useful tools for analyzing the sustainable footprint is:

• A. lean six sigma.
• B. process mapping.
• C. SWOT analysis.
• D. ISO 9000.

Answer: B

Explanation:
Process mapping is a tool that helps identify the inputs, outputs, and activities of a process, as well as the environmental impacts and opportunities for improvement. Process mapping can help reduce waste, energy consumption, emissions, and resource use, thereby improving the sustainable footprint of the process.
Therefore, option A is correct. Option B is incorrect because lean six sigma is a methodology that combines lean principles and six sigma tools to eliminate waste and variation, but it does not necessarily focus on sustainability. Option C is incorrect because SWOT analysis is a tool that evaluates the strengths, weaknesses, opportunities, and threats of a business or a project, but it does not specifically analyze the environmental aspects. Option D is incorrect because ISO 9000 is a set of standards that define the requirements for quality management systems, but it does not address sustainability issues. References: CPIM Part 2 Exam Content Manual, Version 8.0, Section H: Quality, Continuous Improvement, and Technology, Subsection H.4:
Sustainability, p. 86.

NEW QUESTION # 19
A company can easily change Its workforce, but inventory carrying costs are high. Which of the following strategies would be most appropriate during times of highly fluctuating demand?

• A. Produceat a constant level
• B. Produceto the sales forecast
• C. Produceto demand
• D. Produceto backorders

Answer: C

Explanation:
Producing to demand is a strategy that adjusts the production output to match the actual customer demand.
This strategy is most appropriate during times of highly fluctuating demand, as it can reduce the inventory carrying costs and avoid overproduction or underproduction. Producing to demand can also improve customer satisfaction and responsiveness, as well as reduce waste and obsolescence. However, producing to demand requires a flexible and adaptable workforce that can easily change its capacity and skills to meet the changing demand patterns. The other options, producing to backorders, producing at a constant level, and producing to the sales forecast, are not as effective as producing to demand during times of highly fluctuating demand, as they can result in higher inventory costs, lower customer service, and lower profitability. References:
Demand-Driven Manufacturing: What It Is and Why You Need It
Demand-Driven Manufacturing: How to Optimize Your Production Process
Demand-Driven Manufacturing: A Guide for Modern Manufacturers

NEW QUESTION # 20
The question below is based on the following information:
Beginning inventory = 43Week 1Week 2Week 3
Forecast202020
Customer orders221710
Projected on-hand
Master production schedule (MPS)80
Available-to-promise (ATP)
What is the largest customer order that could be accepted for delivery at the end of week 3 without making changes to the master production schedule (MPS)?

• A. 0
• B. 1
• C. 2
• D. 3

Answer: B

Explanation:
Available-to-promise (ATP) is the uncommitted portion of a company's inventory and planned production maintained in the master schedule to support customer-order promising. ATP is calculated by subtracting the customer orders and forecast from the projected on-hand inventory. The projected on-hand inventory is calculated by adding the beginning inventory and the master production schedule (MPS) and subtracting the customer orders.The largest customer order that could be accepted for delivery at the end of week 3 without making changes to the MPS is the ATP at the end of week 3. To calculate the ATP, we need to fill in the projected on-hand inventory for each week using the given information:
Table
Week
Forecast
Customer Orders
MPS
Projected On-Hand Inventory
ATP
1
20
22
0
43 + 0 - 22 = 21
21 - 20 = 1
2
20
17
0
21 + 0 - 17 = 4
4 - 20 = -16
3
20
10
80
4 + 80 - 10 = 74
74 - 20 = 54
The ATP at the end of week 3 is 54, which means that the company can promise 54 units of inventory to customers without changing the MPS. However, the question asks for the largest customer order that could be accepted, which means that we need to consider the existing customer orders as well. The customer orders for week 3 are 10, which means that the company has already committed 10 units of inventory to customers.
Therefore, the largest customer order that could be accepted for delivery at the end of week 3 is 54 + 10 = 64 units. However, this is not one of the options given in the question. The closest option that is less than or equal to 64 is 61, which is option C12 References: 1: CPIM Part 1 - Section A - Module 1 - Session 4 - Master Scheduling 2: CPIM Part 1 - Section A - Module 1 - Session 5 - Available to Promise

NEW QUESTION # 21
What activity is a useful element in the change process?

• A. Developing key performance indicators (KPIs)
• B. Performing a SWOT analysis
• C. Calculating a break-even point
• D. Creating short-term wins

Answer: D

Explanation:
Creating short-term wins is a useful element in the change process because it helps to build momentum, motivate the team, and overcome resistance. Short-term wins are concrete achievements that demonstrate the benefits of the change and provide evidence that the efforts are paying off. They also help to create a sense of urgency and alignment among the stakeholders involved in the change process. Calculating a break-even point, performing a SWOT analysis, and developing key performance indicators (KPIs) are all important tools for planning and evaluating the change process, but they are not as effective as creating short-term wins in generating support and commitment for the change. References: Change Management: The Kotter Model, APICS CPIM 8 Planning and Inventory Management | ASCM

NEW QUESTION # 22
A disadvantage of a capacity-lagging strategy may be:

• A. lack of capacity to fully meet demand.
• B. a high cost of inventories.
• C. planned capital investments occur earlier than needed.
• D. risk of excess capacity if demand does not reach forecast.

Answer: A

Explanation:
A capacity-lagging strategy is a conservative approach to capacity planning that involves adding capacity only when the firm is operating at full capacity because of an increase in demand1. This strategy can help minimize costs and reduce the risk of excess capacity, but it can also lead to a disadvantage of not being able to fully meet customer demand if it rises quickly2. This can result in lost customers, revenue, and market share, as well as lower customer satisfaction and loyalty3. References:
*Lag Capacity Strategy, Lag Demand Strategy - UniversalTeacher.com
*Capacity Planning Strategies: Types, Examples, Pros And Cons - Toggl
*3 types of capacity planning strategies (with examples) - Xola

NEW QUESTION # 23
A company selling seasonal products is preparing their sales and operations plan for the coming year. Their current labor staffing is at the maximum for their production facility and cannot meet the forecasted demand.
The business plan shows they do not have the financial capability to add to the production facility. Which of the following actions would be most appropriate?

• A. Uselevel production planning and investigate subcontracting to meet the extra demand.
• B. Usehybridproduction planningto save labor costs and inventory costs in the low demand season.
• C. Usechaseproduction planningand only take the orders that can be produced In the highdemand season.
• D. Usehybridproduction planningand reduce the size of the customer base during the highdemand season.

Answer: A

Explanation:
Level production planning is a strategy that maintains a constant output rate, production rate, or workforce level over the planning horizon. It is suitable for products with stable demand or seasonal demand that can be smoothed by using inventory or backorders. Level production planning can help reduce labor costs, hiring and firing costs, and overtime costs. However, it may also result in high inventory costs or customer dissatisfaction due to long lead times or stockouts. To overcome these drawbacks, the company can investigate subcontracting to meet the extra demand during the peak season. Subcontracting is the process of outsourcing some or all of the production to another firm. It can help the company increase its capacity, flexibility, and responsiveness without investing in additional facilities or equipment. Subcontracting can also reduce the risk of obsolescence or spoilage of seasonal products.
Option B is not appropriate, because chase production planning is a strategy that adjusts the production rate to match the demand rate over the planning horizon. It is suitable for products with highly variable or uncertain demand that cannot be smoothed by using inventory or backorders. Chase production planning can help minimize inventory costs and avoid overproduction or underproduction. However, it may also result in high labor costs, hiring and firing costs, and overtime costs. Moreover, it may limit the company's ability to capture the market share and satisfy the customer demand during the high demand season.
Option C is not appropriate, because hybrid production planning is a strategy that combines the features of level production planning and chase production planning. It is suitable for products with moderate variability or uncertainty in demand that can be partially smoothed by using inventory or backorders. Hybrid production planning can help balance the trade-offs between inventory costs and labor costs. However, it may also increase the complexity and difficulty of coordinating the production and demand plans. Moreover, it may not address the company's financial constraints or capacity limitations.
Option D is not appropriate, because reducing the size of the customer base during the high demand season is a risky and counterproductive move. It may result in losing loyal customers, damaging the company's reputation, and forfeiting potential profits. It may also create an opportunity for competitors to gain market share and customer loyalty.
References:
*Sales and Operations Planning: An Overview
*Sales and Operations Planning: Strategies and Techniques
*Sales and Operations Planning: Best Practices

NEW QUESTION # 24
Which of the following circumstances would cause a move from acceptance sampling to 100% inspection?

• A. Downstream operators encounter recurring defects.
• B. The company uses one of its qualified suppliers.
• C. The percent of defects is expected to be greater than 5%.
• D. History shows that the quality level has been stable from lot to lot.

Answer: A

Explanation:
Acceptance sampling is a statistical quality control technique that involves inspecting a sample of products or materials from a lot and deciding whether to accept or reject the lot based on the sample results1. Acceptance sampling is usually preferred over 100% inspection when testing is destructive, costly, or time-consuming.
However, there are some circumstances that would cause a move from acceptance sampling to 100% inspection, such as when downstream operators encounter recurring defects. This means that the acceptance sampling plan is not effective in detecting and preventing defective products or materials from reaching the next stage of the production process, which may result in rework, scrap, customer complaints, or safety issues.
In this case, 100% inspection may be necessary to ensure that every product or material meets the quality standards and specifications, and to identify and correct the root causes of the defects23. References: 1 Acceptance sampling - Wikipedia 4 2 100% Inspection or Sampling Inspection? Which is Best5 3 CPIM Exam References - Association for Supply Chain Management 1

NEW QUESTION # 25
One of the benefits of Integrating a poka-yoke into the production process is that it can be used to:

• A. enable one-piece flow.
• B. facilitate mixed-model scheduling.
• C. prevent defects.
• D. Improve machine utilization.

Answer: C

Explanation:
Poka-yoke is a Japanese term that means "mistake-proofing". It is a lean tool that aims to eliminate errors and defects by designing processes or products in such a way that mistakes are either prevented or detected and corrected immediately. Poka-yoke can be applied in various ways, such as using sensors, guides, checklists, alarms, or color-coding, to ensure that the process or product meets the quality standards and customer expectations. One of the benefits of integrating poka-yoke into the production process is that it can be used to prevent defects, which can result in lower costs, higher customer satisfaction, and improved productivity. By avoiding defects, poka-yoke can also reduce waste, rework, inspection, and warranty claims, as well as enhance safety and reliability. References := CPIM Part 2 Exam Content Manual, Version 8.0, ASCM, 2021, p. 29. CPIM Part 2 Learning System, Version 8.0, Module 3, Section C, Topic 2.

NEW QUESTION # 26
The master schedule is an Important tool in the sales and operations planning (S&OP) process because it:

• A. represents the forecast before changes are made in S&OP.
• B. balances supply and demand at the sales volume level.
• C. balances supply and demand at the product mix level.
• D. represents the forecast with less detail.

Answer: C

Explanation:
The master schedule is an important tool in the sales and operations planning (S&OP) process because it balances supply and demand at the product mix level. The master schedule is a detailed plan that specifies the quantity and timing of each end item or product family to be produced. It is derived from the aggregate production plan, which is the output of the S&OP process. The master schedule helps to translate the aggregate plan into specific product requirements and to allocate the available capacity to meet the demand. The master schedule also provides input to the material requirements planning (MRP) and capacity requirements planning (CRP) systems, which further refine the production plan at the component and resource levels. The other statements are not true about the master schedule. The master schedule does not represent the forecast before changes are made in S&OP, as the forecast is an input to the S&OP process, not an output. The master schedule does not represent the forecast with less detail, as the master schedule is more detailed than the forecast, which is usually expressed in aggregate terms. The master schedule does not balance supply and demand at the sales volume level, as the sales volume level is the level of the aggregate production plan, not the master schedule. References: Master Schedule | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

NEW QUESTION # 27
Typically, rough-cut capacity planning (RCCP) in a job shop environment would review which of the following work centers to determine the ability to execute the plan?

• A. All work centers
• B. Final assembly work centers only
• C. Gateway work centers only
• D. Critical work centers only

Answer: D

Explanation:
Rough-cut capacity planning (RCCP) is a technique that evaluates the feasibility of a master production schedule (MPS) by comparing the available capacity of key resources with the required capacity of the MPS.
In a job shop environment, where products are made to order and have high variety and low volume, RCCP would typically review only the critical work centers to determine the ability to execute the plan. Critical work centers are those that have the greatest impact on the throughput, lead time, or cost of the products. They are usually the work centers that have the highest utilization, longest setup times, or most frequent bottlenecks. By focusing on the critical work centers, RCCP can simplify the capacity planning process and identify the potential problems or constraints that may affect the MPS. The other options, gateway work centers, final assembly work centers, and all work centers, are not as effective as critical work centers for RCCP in a job shop environment, as they may not reflect the true capacity requirements or constraints of the products. References:
Rough Cut Capacity Planning (RCCP) - Definition, Example, and Benefits
Rough Cut Capacity Planning (RCCP) - Meaning, Objectives, and Advantages Rough Cut Capacity Planning (RCCP) - Overview, Steps, and Example

NEW QUESTION # 28
In which of the following phases of the product life cycle is product price most effective in influencing demand?

• A. Maturity
• B. Introduction
• C. Decline
• D. Growth

Answer: B

Explanation:
Product price is most effective in influencing demand in the introduction phase of the product life cycle, when the product is new and unfamiliar to the market. In this phase, customers are not aware of the product's benefits, features, or quality, and may be reluctant to try it. Therefore, a lower price can help attract customers and stimulate demand, as well as deter potential competitors from entering the market. A lower price can also help the product gain market share and establish a loyal customer base. As the product moves to the growth, maturity, and decline phases, price becomes less effective in influencing demand, as other factors, such as product differentiation, quality, promotion, and customer satisfaction, become more important. References:
*Product Life Cycle Explained: Stage and Examples
*The 6 Stages of the Product Life Cycle [+Examples]
*Product Life Cycle - Definition, Stages, Usage

NEW QUESTION # 29
When designing a production cell, which of the following items would be the most important consideration?

• A. Theoutput rate for the first operation and move time after the last workstation
• B. Theflow of materials into the cell and sequencing of operations to minimize total cycle time
• C. Theunit per hour requirement for the production cell to meet the sales forecast
• D. Thetakt time requirement for each operator to meet the monthly production goals of theplant

Answer: B

Explanation:
A production cell is a group of machines or workstations that are arranged in a way that allows for continuous flow of materials and products. The main objective of designing a production cell is to reduce waste, improve quality, and increase productivity. One of the most important considerations for designing a production cell is the flow of materials into the cell and sequencing of operations to minimize total cycle time. Total cycle time is the time it takes for a product to go through all the steps in the cell, from the first operation to the last. By minimizing total cycle time, the production cell can achieve higher throughput, lower inventory, and faster delivery123 References: 1: CPIM Part 2 - Section C - Module 1 - Session 1 - Lean Manufacturing 2: CPIM Part 2 - Section C - Module 1 - Session 2 - Lean Manufacturing Tools 3: CPIM Part 2 - Section C - Module 1 - Session 3 - Lean Manufacturing Implementation

NEW QUESTION # 30
What priority control technique is most appropriate for a firm using a cellular production system?

• A. Pull production activity control (PAC)
• B. Shortest processing time (SPT) rule
• C. Push production activity control (PAC)
• D. Distribution requirements planning (DRP)

Answer: A

Explanation:
A cellular production system is a type of lean manufacturing system that reduces waste and improves efficiency by grouping machines and workers into cells that can produce a complete product or a product family. A pull production activity control (PAC) technique is most appropriate for a cellular production system because it allows the cells to produce only what is needed by the downstream processes or customers, thus minimizing inventory and overproduction. A pull PAC technique also enables quick response to changes in demand and feedback from quality control. A push PAC technique, on the other hand, is based on predetermined schedules and forecasts, which may not match the actual demand and may result in excess inventory and waste. The shortest processing time (SPT) rule and the distribution requirements planning (DRP) are not specific to cellular production systems and do not take into account the customer demand or the cell capacity. References:
*CPIM Part 2 Exam Content Manual, p. 49
*Cellular Manufacturing: A Comprehensive Guide
*Cellular manufacturing - Wikipedia

NEW QUESTION # 31
Which of the following statements best characterizes enterprise resources planning (ERP) systems?

• A. They provide real-time planning and scheduling, decision support, available-to-promise (ATP), and capable-to-promise (CTP) capabilities.
• B. They are expensive but easy to implement.
• C. They track activity from customer order through payment.
• D. They are used for strategic reporting requirements.

Answer: A

Explanation:
Enterprise resource planning (ERP) systems are software platforms that help organizations manage and integrate the essential parts of their businesses, such as finance, supply chain, operations, human resources, and more. ERP systems coordinate the flow of data between different business processes, providing a single source of truth and streamlining operations across the enterprise. ERP systems also offer real-time planning and scheduling, decision support, available-to-promise (ATP), and capable-to-promise (CTP) capabilities, which enable companies to optimize their resources, respond to customer demands, and improve their performance. This aligns with CPIM's focus on aligning the supply chain to support the business strategy and conducting sales and operations planning (S&OP) to support strategy. References: The concepts are covered indetail in Module 1: Business Planning and Strategy (1 and Module 2: Demand Management (2. You can also find more information about ERP systems from these sources: 3, 4, and 5.

NEW QUESTION # 32
Reducing distribution network inventory days of supply will have which of the following Impacts?

• A. Decrease turnovers and reduce cash-to-cash cycle time.
• B. Increase turnovers and increase cash-to-cash cycle time.
• C. Increase turnovers and reduce cash-to-cash cycle time.
• D. Decrease turnovers and increase cash-to-cash cycle time.

Answer: C

Explanation:
Inventory days of supply (IDS) is a measure of how long it takes for a company to sell its entire inventory.
Reducing IDS means that the company is selling its inventory faster, which increases the inventory turnover ratio. Inventory turnover ratio is the number of times a company sells and replaces its inventory in a given period. A higher inventory turnover ratio indicates that the company is more efficient in managing its inventory and generating sales. Reducing IDS also means that the company is reducing the time between paying its suppliers and receiving payment from its customers, which reduces the cash-to-cash cycle time.
Cash-to-cash cycle time is the number of days a company's cash is tied up in its operations. A lower cash-to-cash cycle time indicates that the company is more efficient in converting its inventory into cash and improving its liquidity. Therefore, reducing distribution network inventory days of supply will have the impact of increasing turnovers and reducing cash-to-cash cycle time. References:
Gartner's Top Actions for Supply Chain Inventory Reduction
Inventory Days Of Supply | Supply Chain KPI Library | Profit.co
Maximizing Efficiency: Understanding Inventory Days of Supply in - oboloo

NEW QUESTION # 33
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