MB-920 Describe Dynamics 365 Supply Chain Management Practice Question
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?
⚠ Common exam trap
Many candidates 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.
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.
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.
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.
- ✗
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.
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