APICS Certified Supply Chain Professional (CSCP) — Question 259

Which of the following risks poses the greatest threat for a make-to-order (MTO) company with a make-to-stock (MTS) supplier?

Answer options

• A. Inventory risk for the company
• B. Inventory risk for the supplier
• C. Debt leverage risk for the company
• D. Debt leverage risk for the supplier

Correct answer: B

Explanation

The correct answer is B, as the supplier's inventory risk can significantly affect the MTO company’s ability to meet customer demands promptly. If the MTS supplier overproduces or underproduces, it can lead to stock shortages or excess inventory, impacting the MTO company’s operations. The other options relate to risks that are less directly tied to the supplier's performance in this context.