Which of the following factors Is considered a carrying cost?
Options:
A.
Setup
B.
Transportation
C.
Obsolescence
D.
Scrap rate
Answer:
C
Explanation:
Explanation:
Carrying cost is the total cost of holding and storing inventory. It includes various expenses such as storage, insurance, taxes, depreciation, and obsolescence. Obsolescence is the loss of value or usefulness of inventory due to changes in technology, customer preferences, or market conditions. Obsolescence is considered a carrying cost because it reduces the potential revenue that can be generated from selling the inventory. Setup, transportation, and scrap rate are not carrying costs, but rather order costs, logistics costs, and quality costs respectively. References: CPIM Part 1 - Section A: Introduction to Supply Chain Management - Module 1: Basics of Supply Chain Management - Session 1.4: Inventory - Inventory Costs. CPIM Part 1 Study Guide, pp. 1-32 - 1-33.
Question 45
A life cycle assessment (LCA) would be used to determine:
Options:
A.
the length of a long-term agreement.
B.
how an Item should be scheduled.
C.
environmental aspects and impacts.
D.
If risk pooling would reduce inventory investment.
Answer:
C
Explanation:
Explanation:
A life cycle assessment (LCA) is a method of evaluating the environmental impacts of a product or service throughout its life cycle, from raw material extraction to disposal or recycling1. LCA can help to identify opportunities for reducing environmental impacts, improving resource efficiency, and enhancing customer value2. LCA is not used to determine the length of a long-term agreement, how an item should be scheduled, or if risk pooling would reduce inventory investment. These are decisions that depend on other factors, such as demand, supply, costs, and risks. References:
•CPIM Part 2 Study Guide, Chapter 2: Supply Chain Strategy, Section 2.3: Sustainability and Corporate Social Responsibility
•ILCD Handbook - General guide on LCA - Detailed guidance, Chapter 1: Introduction to LCA and LCT
