Certified Supply Chain Professional (CSCP) Practice Exam

What does 'profitable to promise' help determine?

1. The reliability of suppliers

2. The impact of external market conditions

3. How profitable a specific order would be after all costs

4. The duration of the order fulfillment process

The correct answer is: How profitable a specific order would be after all costs

'Profitable to promise' is a concept that assists businesses in evaluating how profitable a specific order will be after accounting for all associated costs. This involves analyzing the cost of production, logistics, labor, and any other expenses that may arise in fulfilling an order. By determining the profitability of fulfilling a particular order, companies can make informed decisions about whether to accept, modify, or reject the order based on its potential financial impact. In this context, understanding the profitability of each order is crucial for effective resource allocation and optimizing overall profit margins. This approach allows organizations to prioritize orders that contribute positively to their bottom line while minimizing potential losses from unprofitable orders. The other options focus on aspects such as supplier reliability, external market influences, and fulfillment duration, which, while important in supply chain management, do not directly relate to determining how profitable a specific order would be after considering all costs.