1. What is an objective of inventory management in business operations?
A. To maximize production
B. To improve manufacturing quality
C. To enhance product functionality
D. To provide the best possible service levels Correct
Explanation
The primary objective of inventory management is to ensure product availability to meet customer demand at the lowest possible cost while minimizing stockouts and overstock situations; in other words, to provide the best possible service levels (high fill rates, on-time delivery). Maximizing production is a manufacturing objective, improving quality belongs to quality management, and enhancing product functionality is a design/R&D responsibility; none of these directly define the core purpose of inventory management.
2. An automobile maker procures gears for its motorcar engine directly from a supplier that manufactures them. What is the core value-added activity of the gear supplier for the automobile maker?
A. Production Correct
B. Maintenance
C. Repairs
D. Audits
Explanation
The gear supplier's primary value-added activity is the actual production (manufacturing) of the gears, which transforms raw materials into finished components ready for assembly into the engine. Maintenance, repairs, and audits are supporting or after-sales services that do not constitute the core value the supplier delivers in this procurement relationship.
3. What is the definition of productivity?
A. The ratio of the output of a process to the input Correct
B. The ratio of the input of a process to the output
C. The ratio of the wastages of a process to the output
D. The ratio of the wastage of a process to the input
Explanation
Productivity is universally defined as the ratio of output (goods or services produced) to input (labor, materials, energy, etc.) used; higher output per unit of input indicates higher productivity. The inverse ratio measures inefficiency, while options focusing on wastage describe waste ratios rather than productivity itself.
4. Which metric quantifies the total revenue or profit each target market customer generates over the buyer's life cycle?
A. Time to market (TTM)
B. Value of a loyal customer (VLC) Correct
C. Cost to serve (CTS)
D. Unit fill rate (UFR)
Explanation
Value of a Loyal Customer (VLC), also known as Customer Lifetime Value (CLV), specifically measures the total net profit or revenue a customer contributes throughout their entire relationship with the company. TTM measures speed of product launch, CTS is an expense metric, and UFR measures order fulfillment accuracy; none capture lifetime value.
5. A confectionery company is following a project management principle for new product development and launch. Project management is in the Plan phase. What is the first key activity?
A. Build a business case for the new product Correct
B. Assess the sales performance of the new product
C. Start manufacturing the new product
D. Distribute the new product in the market
Explanation
In the planning phase of new product development, the very first critical activity is to build a robust business case that justifies the investment by analyzing market potential, financial returns, risks, and strategic fit. Sales assessment, manufacturing, and distribution occur only after the project is approved and moves into execution or later phases.