Certified Supply Chain Professional (CSCP) Practice Exam

In the context of supply chain management, what are hiring and layoffs considered?

1. Ongoing costs

2. Pre-transaction costs

3. Operational costs

4. Post-transaction costs

The correct answer is: Pre-transaction costs

In supply chain management, hiring and layoffs are considered pre-transaction costs because they occur before the actual transactions in the supply chain process take place. These activities involve personnel decisions that directly impact the capability of an organization to fulfill its supply chain functions. By managing hiring effectively, a company ensures that it has the right personnel in place to support operations and maintain efficiency. Similarly, layoffs, while often associated with cost-cutting during challenging times, also reflect necessary adjustments before any operational transactions are executed. The influence of these decisions on the overall efficiency and capability of the supply chain highlights why they are classified as pre-transaction costs. Other options do not properly categorize hiring and layoffs. Ongoing costs refer to the continuous expenses of running operations, operational costs pertain to expenses incurred during the actual production or transaction phases, while post-transaction costs are associated with activities or expenses that occur after a transaction is completed, such as warranty claims or customer service.