ISM INTE Exam - Topic 1 Question 14 Discussion

Actual exam question for ISM's INTE exam

Question #: 14
Topic #: 1

PQR, Inc. produces office supplies for big box retailers. This is a highly competitive market and the requirement for maintaining a continuous inventory of product for retailers is a high priority for PQR. Recently, the firm experienced shipping delays from overseas suppliers. Which of the costs associated with shortages would be MOST critical for PQR?

AIdle workers

BProduction downtime

CExpedited shipping

DLost sales

Show Suggested Answer

Suggested Answer: D

In a highly competitive market like office supplies, the most critical cost associated with shortag-es is typically lost sales. If PQR, Inc. experiences shipping delays and cannot maintain continuous inventory, customers are likely to turn to competitors to meet their needs. This can result in im-mediate lost sales and potentially long-term loss of customer loyalty. The cost of lost sales often outweighs other costs like idle workers or production downtime because it directly affects revenue and market share. Reference:

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

* Christopher, M. (2016). Logistics & Supply Chain Management. Pearson UK.

by Hortencia at Sep 15, 2024, 04:47 AM

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Hermila

6 months ago

Idle workers are a concern, but they can be managed better than lost sales.

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Lili

6 months ago

Wait, are lost sales really the most critical? Seems like a stretch.

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Lura

6 months ago

Production downtime is critical, but lost sales might hurt more.

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Penney

7 months ago

I think expedited shipping costs could add up fast too.

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Lou

7 months ago

Definitely lost sales! That’s a huge hit in retail.

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Alba

7 months ago

I recall a practice question where idle workers were mentioned, but I think lost sales would be the most immediate concern for PQR right now.

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Shantay

7 months ago

I feel like production downtime could be a big issue, but I’m not certain if it’s as critical as lost sales in this scenario.

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Quentin

8 months ago

I'm not entirely sure, but I think expedited shipping costs might be significant too, since they could help mitigate some of the delays.

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James

8 months ago

I remember we discussed how lost sales can really hurt a company's reputation and revenue, especially in a competitive market like this.

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Tula

8 months ago

Expedited shipping costs would definitely be a concern, but I don't think that would be the most critical issue for PQR. Maintaining inventory levels and avoiding lost sales seems like the top priority here, so I'm leaning towards that as the best answer.

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Florinda

8 months ago

Production downtime could also be a big issue for PQR. If they can't get the supplies they need, they won't be able to keep their manufacturing lines running, which would be a huge problem. I'll have to weigh the pros and cons of each choice.

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Josephine

8 months ago

Lost sales seems like the most obvious answer here. If PQR can't fulfill orders for their big box retail customers, that's going to have a major impact on their revenue and profitability. I'll go with that option.

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Elsa

8 months ago

Hmm, I'm a bit unsure about this one. There are a few different costs mentioned, and I'll need to think carefully about which one would be most critical for a company like PQR that needs to maintain continuous inventory.

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Tayna

8 months ago

This seems like a straightforward question about inventory management and the costs associated with shortages. I'll focus on identifying the most critical cost for PQR based on the information provided.

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