This MB-920 practice question tests your understanding of describe the core capabilities of the finance and operations apps. 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 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?
Reorder point
Why wrong: Reorder point can lead to higher inventory if not managed carefully.
Economic order quantity (EOQ)
Why wrong: EOQ balances ordering and holding costs but does not necessarily minimize inventory.
Safety stock
Why wrong: Safety stock increases inventory holding costs.
Just-in-time (JIT)
JIT minimizes inventory by ordering materials only when needed for production.
Answer choices
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.
Key principle: Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Answer analysis
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.
Related concept
Read the scenario before looking for a memorised answer.
Common exam traps
The trap here is that candidates often 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.
Detailed technical explanation
In Dynamics 365 Supply Chain Management, JIT is often operationalized through lean manufacturing with kanban boards and pull-based replenishment, where production cells signal upstream processes only when a downstream need exists. This contrasts with push-based systems like MRP, which schedule orders based on forecasts and can lead to overproduction and excess inventory. A real-world scenario is an automotive assembly line that uses JIT to receive parts from suppliers within hours of installation, drastically reducing warehouse space and carrying costs.
Key takeaway
Answer the scenario, not the keyword: identify the specific constraint before choosing the most familiar-sounding option.
Real-world example
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.
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FAQ
Describe the core capabilities of the finance and operations apps — This question tests Describe the core capabilities of the finance and operations apps — Read the scenario before looking for a memorised answer..
The correct answer is: 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.
Identify which exam domain this question belongs to, review the core concept, then practise similar questions from the same domain.
Read the scenario before looking for a memorised answer.
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Last reviewed: Jun 24, 2026
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