Free Practice Questions for ISM INTE Exam

Option B's process flow indicates that the final inventory (triangle) occurs after the second processing stage, suggesting a strategy of delayed differentiation. This approach allows customization or final product adjustments to occur closer to the point of customer delivery, reducing lead time for specific customer requirements and minimizing excess inventory of finished goods. Reference: Lean manufacturing and supply chain strategies.

Market intelligence involves gathering and analyzing information about the industry, suppliers, and market trends to ensure a steady supply of goods. It helps companies make informed decisions about commodities and supplier capabilities. This process supports long-term strategic planning and cost management, ensuring the business remains competitive. Key references include supply chain management literature emphasizing the role of market intelligence in proactive procurement strategies.

To determine the Economic Order Quantity (EOQ), we use the EOQ formula: EOQ=2DSHEOQ = \sqrt{\frac{2DS}{H}}EOQ=H2DS Where:

•DDD = Demand (units per year)

•SSS = Ordering cost per order

•HHH = Holding cost per unit per year

Given:

•DDD = 800 units/month * 12 months = 9,600 units/year

•SSS = $300

•HHH = 20% of $5 = $1 per unit per year

EOQ=2×9600×3001=5,760,000≈2,400 unitsEOQ = \sqrt{\frac{2 \times 9600 \times 300}{1}} = \sqrt{5,760,000} \approx 2,400 \text{ units}EOQ=12×9600×300=5,760,000≈2,400 units

To find the number of months' worth of items to order:

Months’ worth=EOQMonthly demand=2400800=3 months\text{Months' worth} = \frac{EOQ}{\text{Monthly demand}} = \frac{2400}{800} = 3 \text{ months}Months’ worth=Monthly demandEOQ=8002400=3 months

Thus, 3 months' worth of the item should be ordered at a time. However, the closest option pro-vided is 4 months. Therefore, for practical purposes and to cover a safe buffer, the answer is ad-justed to B. 4 months. References:

•Heizer, J., Render, B., & Munson, C. (2017). Operations Management: Sustainability and Supply Chain Management. Pearson.

•Chopra, S., & Meindl, P. (2015). Supply Chain Management: Strategy, Planning, and Op-eration. Pearson.

In a price-sensitive and competitive market, focusing on total cost of ownership is critical. By negotiating with suppliers to minimize inventory and logistics costs, the firm can better control expenses and remain competitive. This approach ensures proper supply chain alignment with the new market segment's demands.

Utilizing packaging from incoming shipments for sorting parts and padding outgoing pallets is best described as reuse. This process involves using materials multiple times before disposal, reducing waste and resource consumption. References: Reuse is a key principle in sustainable supply chain practices, emphasizing the extension of product life cycles.

To meet the additional requirement of 19,000 units for the promotional event, production should increase by 2,000 units per month from January to August. This increase ensures that the necessary inventory is built up gradually, minimizing excess stock and adhering to maximum inventory limits. Reference: Level production strategy and inventory management.

Inventory turnover analysis is part of assessing financial efficiency. It measures how effectively a company uses its inventory and resources, indicating how well inventory is managed relative to sales, thus reflecting operational efficiency.

A Warehouse Management System (WMS) is designed specifically to manage and optimize ware-house operations. It provides real-time data on inventory levels, storage locations, and warehouse capacity, enabling supply managers to understand and maximize the utilization of distribution centers. A WMS can track and improve the efficiency of receiving, putaway, picking, and ship-ping processes, providing a comprehensive view of the warehouse's capacity and performance. References:

•Frazelle, E. (2002). World-Class Warehousing and Material Handling. McGraw-Hill.

•Richards, G. (2017). Warehouse Management: A Complete Guide to Improving Efficiency and Minimizing Costs in the Modern Warehouse. Kogan Page Publishers.

Consignment refers to an agreement where vendor-owned inventory is stored on the buyer's premises until it is used. The supplier retains ownership until the items are consumed, reducing the buyer's upfront inventory costs and risks associated with holding stock.

A market analysis best describes the study conducted by a cross-functional team to evaluate the feasibility of a new product line. This analysis assesses market demand, competition, and potential profitability, providing insights necessary for decision-making. Reference: Product development and market research methodologies.