MB-920 Describe Dynamics 365 Supply Chain Management Practice Question
A manufacturing company uses Dynamics 365 Supply Chain Management. They want to optimize inventory levels by using a replenishment strategy that maintains a constant stock level based on forecast demand. Which replenishment method should they use?
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
✓
Min/Max replenishment
Min/Max replenishment, because it maintains inventory levels between a minimum and maximum quantity based on forecast demand, ensuring a constant stock level. Option A, Vendor-managed inventory, is incorrect because it involves the supplier managing stock, not maintaining a constant level. Option B, Economic Order Quantity (EOQ), is incorrect as it calculates optimal order quantities to minimize total costs, not to maintain a constant level. Option C, Kanban, is a pull-based method triggered by actual consumption, not forecast demand.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Vendor-managed inventory
Why it's wrong here
Incorrect. Vendor-managed inventory shifts stock management to the supplier, but does not maintain a constant level based on forecast demand.
- ✗
Economic Order Quantity (EOQ)
Why it's wrong here
Incorrect. Economic Order Quantity (EOQ) determines order sizes to minimize inventory costs, not to sustain a constant stock level.
- ✗
Kanban
Why it's wrong here
Incorrect. Kanban is a pull system that replenishes based on actual usage, not forecast demand.
- ✓
Min/Max replenishment
Why this is correct
Correct. Min/Max replenishment keeps inventory within a predetermined range using forecast demand, ensuring a constant stock level.
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