APICS APICS Certifications CPIM Questions & Answers

• Question 1:

  In preparing for a facility location decision, proximity to suppliers would be classified as which kind of criteria?

  A. Service level requirements

  B. Future flexibility factors

  C. Access to transportation

  D. Cost factors

  Correct Answer: D

  Proximity to suppliers would be classified as a cost factor in preparing for a facility location decision. Cost factors are the expenses associated with operating a facility in a specific location, such as labor, materials, utilities, taxes, and transportation. Proximity to suppliers can affect the cost of inbound transportation, inventory holding, and quality control. Choosing a location that is close to suppliers can reduce these costs and improve the efficiency and reliability of the supply chain.

  References : Managing Supply Chain Operations, Chapter 2: Global Supply Chain Strategy, Section 2.3: Facility Location CPIM ontent Manual, Module 1: Supply Chains and Strategy, Section 1.4: Facility Location, Subsection 1.4.1: Facility Location Concepts

• Question 2:

  Which of the following methods places a replenishment order when the quantity on hand falls below a predetermined level?

  A. Min-max system

  B. Fixed order quantity

  C. Periodic review

  D. Available-to-promlse (ATP)

  Correct Answer: B

  Fixed order quantity is a method that places a replenishment order when the quantity on hand falls below a predetermined level, called the reorder point. The reorder point is calculated based on the expected demand during the lead time and the safety stock. The order quantity is fixed and constant, and it is determined by the economic order quantity (EOQ)formula or other criteria. Fixed order quantity is also known as the order point/order quantity (OP/OQ) system or the continuous review system. quantity on hand falls below a minimum level, called the order point. The order quantity is variable and depends on the difference between the maximum level and the current inventory level. Min-max system is also known as the two-bin system or the bin system.

  Option C is not correct, because periodic review is a method that places a replenishment order at fixed intervals of time, regardless of the quantity on hand. The order quantity is variable and depends on the difference between the target inventory level and the current inventory level. Periodic review is also known as the fixed order interval (FOI) system or the periodic order quantity (POQ) system.

  Option D is not correct, because available-to-promise (ATP) is not a method of inventory replenishment, but a calculation of the uncommitted portion of the current inventory and planned production. ATP is used to promise delivery dates to customers based on the availability of inventory and production capacity.

  References: Inventory Management and Control Inventory Replenishment Methods Inventory Replenishment Policies

• Question 3:

  An effective approach to projecting requirements for materials with long lead times Includes which of the following options?

  A. Initiate a multilevel master schedule.

  B. Use phantom bills of materials (BOMs).

  C. Increase the level of safety stock.

  D. Decrease the planning horizon.

  Correct Answer: A

  An effective approach to projecting requirements for materials with long lead times is to initiate a multilevel master schedule. A multilevel master schedule is a detailed plan that shows the quantities and timing of the end items and all of their components at each level of the bill of materials (BOM). By using a multilevel master schedule, a planner can determine the requirements for materials with long lead times and place orders in advance to avoid shortages or delays. A phantom bill of materials (BOM) is a temporary grouping of components that are used in the production of a parent item, but do not exist as a separate item in inventory. A phantom BOM is not an effective approach to projecting requirements for materials with long lead times, as it does not reflect the actual demand for the components. Increasing the level of safety stock is a way of mitigating the risk of uncertainty in demand or supply, but it is not an effective approach to projecting requirements for materials with long lead times, as it increases the inventory carrying costs and does not address the root cause of the problem. Decreasing the planning horizon is the opposite of an effective approach to projecting requirements for materials with long lead times, as it reduces the visibility and accuracy of the forecast and increases the likelihood of stockouts or excess inventory.

  References: CPIM Part 2 Learning System, Module 1: Supply Chain Strategy, Section 1.4: Master Scheduling CPIM Part 2 Learning System, Module 3: Supply, Section 3.2: Material Requirements Planning

• Question 4:

  The costs provided in the table below are associated with buying a quantity larger than immediately needed.

  What Is the total landed cost based on this table?

  Cost CategoryCost

  Custom fees$125

  Freight$700

  Warehouse rent$200

  Matenal cost$500

  A. $825

  B. $1,325

  C. $1,400

  D. $1,525

  Correct Answer: D

  The total landed cost is the sum of all the costs associated with buying a quantity larger than immediately needed, including the cost of the product, the custom fees, the freight, and the warehouse rent. Based on the table, the total landed cost can be calculated as follows:

  Landed cost = material cost + custom fees + freight + warehouse rent Landed cost = $500 + $125 + $700 + $200 Landed cost = $1,525

  Therefore, the correct answer is D. $1,525. The other options are not correct, as they either omit some of the costs or use incorrect values. The total landed cost reflects the direct costs only to move the product from the factory floor to the customer. It is an important supply chain KPI in inventory management, as it helps to determine the optimal order quantity, pricing, and profitability of the products.

  References : What is Landed Cost? | Calculation and Tips to Improve - ORBA Cloud CFO What is Landed Cost and Why is it Important | Finale Inventory

• Question 5:

  The primary benefit that results from the cross-training of employees is:

  A. improved flexibility.

  B. improved capacity.

  C. shortened lead time.

  D. effective problem-solving.

  Correct Answer: A

  Cross-training employees is the process of training employees for skills and job roles they weren't initially hired for. This allows them to switch between different tasks and roles when needed, which increases the flexibility and adaptability of the workforce. Cross-training also enhances the problem-solving, communication, and collaboration skills of the employees, but the primary benefit is improved flexibility

• Question 6:

  Which of the following factors Is considered a carrying cost?

  A. Setup

  B. Transportation

  C. Obsolescence

  D. Scrap rate

  Correct Answer: C

  Carrying cost is the total cost of holding and storing inventory. It includes various expenses such as storage, insurance, taxes, depreciation, and obsolescence. Obsolescence is the loss of value or usefulness of inventory due to changes in technology, customer preferences, or market conditions. Obsolescence is considered a carrying cost because it reduces the potential revenue that can be generated from selling the inventory. Setup, transportation, and scrap rate are not carrying costs, but rather order costs, logistics costs, and quality costs respectively.

• Question 7:

  Which of the following prioritization rules will have the greatest impact In reducing the number of orders In queue?

  A. Critical ratio

  B. Shortest processing time

  C. Fewest operations remaining

  D. First come, first served

  Correct Answer: B

  The shortest processing time rule is a prioritization rule that assigns the highest priority to the job that requires the least amount of processing time. This rule minimizes the average flow time of jobs and reduces the number of jobs in queue. The critical ratio rule assigns priority based on the ratio of time remaining until the due date to the remaining processing time. The fewest operations remaining rule assigns priority based on the number of remaining operations for each job. The first come, first served rule assigns priority based on the arrival time of the jobs. References: Managing Supply Chain Operations, Chapter 9: Scheduling and Sequencing, page 237. Manufacturing Planning and Control for Supply Chain Management: The CPIM Reference, Second Edition, Chapter 13: Scheduling and Execution, page 419.

• Question 8:

  A tool to map and understand the flow of materials from supplier to customer, focusing on not only understanding the current state of process and flow but also specifying the value-added and non- value-added time of all process steps, is called_____________________

  Correct Answer: Value stream mapping

• Question 9:

  The planned channels of Inventory disbursement from one or more sources to field warehouses are known as:

  A. a supply chain community.

  B. interplant demand.

  C. a bill of distribution.

  D. logistics data interchange (LDI).

  Correct Answer: C

  A bill of distribution is the planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer. There may be one or more levels in the disbursement system. It is used to allocate inventory

  among different distribution centers based on demand, capacity, and costs. A bill of distribution is similar to a bill of materials, but for distribution planning instead of production planning. The other options are not correct, as they refer to

  different concepts in distribution management:

  A supply chain community is a network of organizations that collaborate to achieve common goals and objectives in the supply chain.

  Interplant demand is the demand for a product or component from one plant to another within the same company.

  Logistics data interchange (LDI) is the electronic exchange of information between logistics partners, such as suppliers, carriers, and customers.

  References:

  [CPIM Part 2 - Section A - Topic 4 - Distribution Planning]

  Distribution Channel Design

  APICS Flashcards

• Question 10:

  A company that uses concurrent engineering is likely to experience which of the following outcomes in the first period of a product's life cycle?

  A. Fewer product design changes

  B. An increase in obsolete inventory

  C. More accurate forecasting

  D. Conflicts between purchasing and engineering

  Correct Answer: A

  Concurrent engineering is a method of designing and developing products in which the different stages run simultaneously, rather than consecutively. It decreases product development time and also the number of errors and rework. By involving all the relevant stakeholders, such as engineering, manufacturing, marketing, and purchasing, in the design process from the beginning, concurrent engineering reduces the need for product design changes later in the product life cycle.