APICS Certified Supply Chain Professional (CSCP) — Question 138

A company has significant cash invested in its finished goods inventories. What action can this company take to significantly reduce its inventory investment while maintaining its customer service levels?

Answer options

• A. Begin production after receipt of customer orders
• B. Move the customer decoupling point from finished goods to components
• C. Increase component assembly lead times
• D. Plan key component material with preferred suppliers

Correct answer: B

Explanation

The correct answer is B because moving the customer decoupling point to components allows the company to produce items based on demand rather than holding excess inventory of finished goods, thus reducing cash investment. Options A and C would increase lead times and potentially compromise customer service, while option D focuses on supplier relationships rather than inventory management.