- A
Increase safety stock percentages for all raw materials by 20%.
Why wrong: This would increase inventory costs without targeting the specific material experiencing stockouts.
- B
Set up a reorder point with dynamic safety stock calculation in Demand Planning.
This allows the system to calculate safety stock based on demand variability and automatically trigger purchase orders when stock reaches the reorder point.
- C
Switch from purchase orders to blanket purchase agreements with the supplier.
Why wrong: Blanket agreements commit to a total quantity but do not manage the timing of releases based on demand.
- D
Negotiate with the supplier to reduce lead time by 50%.
Why wrong: Reducing lead time helps but is not directly under the supply chain manager's control and does not address demand variability.
MB-920 Describe Dynamics 365 Supply Chain Management Practice Question
This MB-920 practice question tests your understanding of describe dynamics 365 supply chain management. Read the scenario carefully and evaluate each option against the stated constraints before committing to an answer. After answering, compare your reasoning against the explanation and wrong-answer breakdown below. Once you have made your selection, read the full explanation to reinforce the concept and understand why each distractor is designed to mislead on exam day.
A manufacturing company is experiencing stockouts of a critical raw material despite maintaining high inventory levels. The procurement team places purchase orders based on historical usage, but demand has become erratic. Which action should the supply chain manager take to improve material availability without increasing inventory costs?
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
Set up a reorder point with dynamic safety stock calculation in Demand Planning.
Option B is correct because Dynamics 365 Supply Chain Management's Demand Planning module can calculate dynamic safety stock based on forecasted demand variability and service level targets. This allows the system to automatically adjust reorder points in response to erratic demand patterns, improving material availability without simply increasing inventory levels across the board.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Increase safety stock percentages for all raw materials by 20%.
Why it's wrong here
This would increase inventory costs without targeting the specific material experiencing stockouts.
- ✓
Set up a reorder point with dynamic safety stock calculation in Demand Planning.
Why this is correct
This allows the system to calculate safety stock based on demand variability and automatically trigger purchase orders when stock reaches the reorder point.
Related concept
Read the scenario before looking for a memorised answer.
- ✗
Switch from purchase orders to blanket purchase agreements with the supplier.
Why it's wrong here
Blanket agreements commit to a total quantity but do not manage the timing of releases based on demand.
- ✗
Negotiate with the supplier to reduce lead time by 50%.
Why it's wrong here
Reducing lead time helps but is not directly under the supply chain manager's control and does not address demand variability.
Common exam traps
Common exam trap: answer the scenario, not the keyword
The trap here is that candidates often assume increasing safety stock (Option A) is the only way to prevent stockouts, but the question specifically asks to improve availability without increasing inventory costs, which requires a dynamic, demand-driven approach rather than a static percentage increase.
Detailed technical explanation
How to think about this question
In Dynamics 365 Supply Chain Management, the Demand Planning module uses time-series forecasting and statistical models (e.g., exponential smoothing, ARIMA) to predict future demand and calculate safety stock as a function of forecast error and desired service level. The reorder point is then set as (average demand during lead time) + (safety stock), and the system can automatically recalculate this as demand patterns change, enabling a responsive yet cost-efficient inventory policy.
KKey Concepts to Remember
- Read the scenario before looking for a memorised answer.
- Find the constraint that changes the correct option.
- Eliminate answers that are true in general but not in this case.
TExam Day Tips
- Watch for words such as best, first, most likely and least administrative effort.
- Review why wrong options are wrong, not only why the correct option is correct.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
How this comes up in practice
A startup's cloud architect reviews their monthly bill and notices costs are higher than expected for a long-running batch job. Switching from on-demand instances to Reserved Instances — or using Spot/Preemptible VMs — can reduce compute costs by up to 72 %. Questions like this test whether you understand the tradeoffs between commitment, flexibility, and cost across cloud pricing models.
What to study next
Got this wrong? Here's your next step.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
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FAQ
Questions learners often ask
What does this MB-920 question test?
Describe Dynamics 365 Supply Chain Management — This question tests Describe Dynamics 365 Supply Chain Management — Read the scenario before looking for a memorised answer..
What is the correct answer to this question?
The correct answer is: Set up a reorder point with dynamic safety stock calculation in Demand Planning. — Option B is correct because Dynamics 365 Supply Chain Management's Demand Planning module can calculate dynamic safety stock based on forecasted demand variability and service level targets. This allows the system to automatically adjust reorder points in response to erratic demand patterns, improving material availability without simply increasing inventory levels across the board.
What should I do if I get this MB-920 question wrong?
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
What is the key concept behind this question?
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 11, 2026
This MB-920 practice question is part of Courseiva's free Microsoft certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the MB-920 exam.
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