Certified Supply Chain Professional (CSCP) Practice Exam

What is a demand management auction primarily used for?

1. To acquire new customers

2. To liquidate excess supply

3. To promote new product launches

4. To establish market prices

The correct answer is: To liquidate excess supply

A demand management auction is primarily utilized to liquidate excess supply. This process allows companies to effectively reduce excess inventory or overstock situations by presenting available products to potential buyers in an auction format. Participants compete for the goods, enabling sellers to quickly find buyers and adjust to fluctuating market demands, thereby minimizing losses from unsold inventory. In this context, the auction format introduces a dynamic aspect to the selling process, allowing for price adjustments based on demand and competition among bidders. By utilizing this method, organizations can optimize their inventory levels and improve cash flow, thus maintaining healthier operational parameters. While acquiring new customers, promoting new product launches, and establishing market prices all represent important marketing and sales functions, they do not specifically capture the primary purpose and focus of a demand management auction, which is effectively addressing excess supply issues.