Certified Supply Chain Professional (CSCP) Practice Exam

In a push system of distribution, what occurs with inventory?

1. Inventory is only replenished when demanded

2. Inventory is pushed to manufacturers for further distribution

3. Inventory is held until needed by end customers

4. Inventory is stored indefinitely at distribution centers

The correct answer is: Inventory is pushed to manufacturers for further distribution

In a push system of distribution, inventory is produced based on forecasted demand and is pushed through the supply chain towards distribution centers and retailers, often before actual customer orders are placed. This means that inventory is generated in anticipation of sales and sent to various points in the system in a proactive manner, rather than being replenished only in response to customer demand. This proactive approach allows manufacturers to maintain a steady flow of goods, aiming to meet anticipated market demands. The focus is less on reacting to current sales figures and more on fulfilling what is expected to be sold, which in turn reduces stockouts and aligns production schedules with projected sales patterns. In contrast to other possibilities, such as only replenishing stock as needed or indefinitely storing products, a push system is characterized by this forward movement of inventory based on forecasts rather than just actual customer demand.