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Exam CSCP topic 1 question 533 discussion

Actual exam question from APICS's CSCP
Question #: 533
Topic #: 1
[All CSCP Questions]

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

  • 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
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Suggested Answer: B 🗳️
by CSPark000 at June 14, 2023, 12:38 p.m.

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Daesma
10 months, 4 weeks ago
Selected Answer: B
In an MTO model, the company manufactures products after receiving an order from the customer, which minimizes its inventory risk because it does not hold large quantities of stock. In contrast, in an MTS model, the supplier manufactures products to stock them in inventory in anticipation of future orders. This means that the supplier carries significant inventory risk, especially if demand for those products decreases or is uncertain.
upvoted 3 times
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CSPark000
1 year ago
Why not B ?
upvoted 1 times
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