Describe the core capabilities of the finance and operations apps →easyMultiple ChoiceObjective-mapped
MB-920 Practice Question: Describe the core capabilities of the finance and operations apps
A manufacturing company uses Dynamics 365 Supply Chain Management. They want to reduce inventory holding costs by implementing a strategy where materials are ordered only when needed for production. Which inventory strategy should they use?
⚠ Common exam trap
It's easy for candidates to confuse JIT with reorder point or EOQ because all three involve ordering materials, but only JIT eliminates inventory holding by synchronizing supply with production demand.
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
✓
Just-in-time (JIT)
Just-in-time (JIT) is the correct inventory strategy because it aligns with the goal of reducing holding costs by ordering materials only when they are needed for production. In Dynamics 365 Supply Chain Management, JIT can be implemented using kanban rules and lean manufacturing principles, which trigger replenishment based on actual consumption rather than forecasted demand, minimizing inventory levels.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Reorder point
Why it's wrong here
Reorder point can lead to higher inventory if not managed carefully.
- ✗
Economic order quantity (EOQ)
Why it's wrong here
EOQ balances ordering and holding costs but does not necessarily minimize inventory.
- ✗
Safety stock
Why it's wrong here
Safety stock increases inventory holding costs.
- ✓
Just-in-time (JIT)
Why this is correct
JIT minimizes inventory by ordering materials only when needed for production.
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