Certified Supply Chain Professional (CSCP) Practice Exam

How would functional products typically be described?

1. High profit with unpredictable demand

2. Low profit with predictable demand

3. Seasonal with high market volatility

4. High demand but low market competition

The correct answer is: Low profit with predictable demand

Functional products are characterized by their stable and predictable demand patterns, often catering to basic needs and commodities that consumers require consistently. This predictability allows companies to plan their production and supply chain operations more efficiently, minimizing disruptions and excess inventory. The low profit margins associated with functional products stem from their widespread availability and competition in the market; they are often produced in high volume, leading to lower prices. These products typically do not require extensive marketing or unique features, as they fulfill essential needs, resulting in steady, but low, profit levels. In summary, the correct description of functional products focuses on their combination of predictable demand and lower profit margins, which distinguishes them from other product categories that may exhibit higher volatility, market competition, or profit potential.