APICS APICS Certifications CPIM Questions & Answers

• Question 101:

  Which of the following situations is most likely to occur when using a push system?

  A. Work centers receive work even if capacity is not available.

  B. Work centers are scheduled using finite capacity planning.

  C. Work centers operate using decentralized control.

  D. Work centers signal previous work centers when they are ready for more work.

  Correct Answer: A

  A push system is a production system that operates based on forecasts and schedules, rather than actual customer demand. A push system pushes products to the market regardless of the current demand, and often results in excess inventory and waste. A push system does not consider the capacity constraints of the work centers, and therefore may send work orders to them even if they are not able to process them. This can create bottlenecks, delays, and inefficiencies in the production process12.

  The other options are not correct because:

  Work centers are scheduled using finite capacity planning. This is not a characteristic of a push system, but rather a pull system. Finite capacity planning is a method of scheduling that takes into account the actual capacity of the work centers, and only releases work orders when there is enough capacity to process them. This reduces the risk of overloading the work centers and improves the flow of production3.

  Work centers operate using decentralized control. This is not a characteristic of a push system, but rather a pull system. Decentralized control is a method of management that gives more autonomy and decision-making power to the work centers, and allows them to adjust their production according to the actual demand and capacity. This increases the flexibility and responsiveness of the production system4.

  Work centers signal previous work centers when they are ready for more work. This is not a characteristic of a push system, but rather a pull system. This is a common practice in a pull system that uses kanban cards as visual signals to trigger the production or replenishment of a product. The work centers only request more work when they have enough capacity and demand for it, and avoid overproduction and waste

• Question 102:

  Which of the following methods most likely Introduces a temporary variance between the inventory balance and the inventory record?

  A. Inventory write-off

  B. Backflushing

  C. Cycle count

  D. Kanban

  Correct Answer: B

  Backflushing is a method of inventory accounting that deducts the materials used in production from the inventory record after the completion of a product or batch. This introduces a temporary variance between the actual inventory balance and the inventory record, which should be reconciled periodically. Inventory write-off, cycle count, and kanban do not cause such a variance.

• Question 103:

  Moving average forecasting methods are best when demand shows:

  A. a clear trend.

  B. high random variation.

  C. consistent seasonality.

  D. a cyclical pattern.

  Correct Answer: B

  Moving average forecasting methods are best when demand shows high random variation, as they help to smooth out the noise and capture the underlying level of demand. Moving average methods use the average of the most recent observations as the forecast for the next period. They assign equal weights to all observations in the average, and drop the oldest observation when a new one becomes available. Moving average methods are not suitable for demand patterns that show a clear trend, consistent seasonality, or a cyclical pattern, as they cannot capture these components of demand. For these patterns, more sophisticated methods such as exponential smoothing or regression are needed.

• Question 104:

  Which of the following tools is used to evaluate the impact that a production plan has on capacity?

  A. Demand time fence (DTF)

  B. Bill of resources

  C. Product routing

  D. Safety capacity

  Correct Answer: B

  A bill of resources is a tool that lists the capacity requirements for each work center or resource group based on the planned production quantities. It is used to evaluate the impact that a production plan has on capacity by comparing the available capacity with the required capacity. A bill of resources can also help identify capacity bottlenecks, excess capacity, and alternative resources. A demand time fence(DTF) is a tool that defines the period of time in which the master production schedule (MPS) is frozen and cannot be changed by customer orders. A product routing is a tool that defines the sequence of operations and work centers required to produce a product. A safety capacity is a tool that provides a buffer against demand and supply uncertainty by adding extra capacity to the planned capacity. These tools are not directly used to evaluate the impact that a production plan has on capacity, although they may affect the capacity planning process.

• Question 105:

  A planner has chosen to increase the order point for a raw material. Which of the following costs is most likely to increase?

  A. Carrying

  B. Ordering

  C. Landed

  D. Product

  Correct Answer: A

  The order point is the level of inventory that triggers a replenishment order. By increasing the order point, the planner is increasing the average inventory level, which in turn increases the carrying cost. Carrying cost is the cost of holding inventory, such as storage, insurance, obsolescence, and opportunity cost. Ordering cost, landed cost, and product cost are not directly affected by the order point

• Question 106:

  A low-cost provider strategy works best when which of the following conditions are met?

  A. Price competition among rivals is similar.

  B. Buyers are more price sensitive.

  C. There are many ways to achieve product differentiation.

  D. There are few industry newcomers.

  Correct Answer: B

  A low-cost provider strategy is a business strategy where a company aims to become the most cost-efficient player in its industry, often by producing goods or providing services at a lower cost than its competitors. The overall goal is to

  increase market share or achieve higher profitability. The low-cost leader in an industry often sets the price that other companies have to match or beat to stay competitive12.

  A low-cost provider strategy works best when buyers are more price sensitive, meaning they are more likely to switch to cheaper alternatives if the price of a product or service increases. This condition creates a strong demand for low-priced

  products or services, and gives the low-cost leader a competitive advantage over rivals who have higher costs and prices. Buyers are more price sensitive when34:

  The product or service is standardized or undifferentiated, and there are few switching costs.

  The product or service represents a significant portion of the buyer's budget or income.

  The product or service has low quality, performance, or image attributes that limit the buyer's satisfaction or loyalty.

  The product or service is not crucial to the buyer's well-being or enjoyment.

  The other options are not correct because:

  Price competition among rivals is similar. This condition does not favor a low-cost provider strategy, because it implies that the industry is already highly competitive and there is little room for differentiation. A low-cost leader would have to

  lower its prices even further to gain an edge over rivals, which could erode its profitability and sustainability.

  There are many ways to achieve product differentiation. This condition does not favor a low-cost provider strategy, because it implies that the industry is diverse and dynamic, and there are many opportunities for innovation and value

  creation. A low-cost leader would have to invest more in research and development, marketing, and customer service to keep up with the changing customer preferences and expectations, which could increase its costs and reduce its

  efficiency.

  There are few industry newcomers. This condition does not favor a low-cost provider strategy, because it implies that the industry is mature and stable, and there are few threats from new entrants. A low-cost leader would have to rely on its

  existing customer base and market share, which could limit its growth potential and expose it to the risk of obsolescence.

• Question 107:

  A statistical safety stock calculation would be appropriate for:

  A. components used in multiple end items.

  B. new products at time of introduction.

  C. end items with stable demand.

  D. supply-constrained raw materials.

  Correct Answer: C

  A statistical safety stock calculation is based on the assumption that demand and lead time are normally distributed and independent. This method is suitable for end items with stable demand, as it can provide a reasonable estimate of the required safety stock to achieve a desired service level. Therefore, option C is correct. Option A is incorrect because components used in multiple end items may have dependent demand, which means that their demand is derived from the demand of the end items. Dependent demand may not follow a normal distribution and may require a different method of safety stock calculation. Option B is incorrect because new products at time of introduction may have uncertain or variable demand, which makes it difficult to apply a statistical safety stock calculation. Option D is incorrect because supply-constrained raw materials may have long and variable lead times, which also complicates the use of a statistical safety stock calculation.

• Question 108:

  Which of the following trade-offs should be evaluated when determining where to place inventory in a multi-echelon supply chain network?

  A. Production cost and lot size quantity

  B. Purchase cost and shrinkage rates

  C. Transportation cost and delivery time

  D. Customer price and order quantity

  Correct Answer: C

  Transportation cost and delivery time are two of the trade-offs that should be evaluated when determining where to place inventory in a multi-echelon supply chain network. A multi-echelon supply chain network consists of multiple levels of distribution, such as factories, warehouses, distribution centers, and retailers. Placing inventory closer to the customers can reduce the delivery time and improve the service level, but it can also increase the transportation cost and the inventory holding cost. Placing inventory farther from the customers can reduce the transportation cost and the inventory holding cost, but it can also increase the delivery time and the risk of stockouts. Therefore, the optimal inventory placement depends on balancing these trade-offs and finding the lowest total cost for the desired service level. The other trade-offs are not directly related to inventory placement in a multi-echelon supply chain network. Production cost and lot size quantity are more related to inventory replenishment policies and economies of scale. Purchase cost and shrinkage rates are more related to inventory sourcing and quality control. Customer price and order quantity are more related to demand management and pricing strategies.

• Question 109:

  An advantage of applying ABC classification to a firm's replenishment items is that:

  A. it distinguishes independent demand from dependent demand.

  B. it allows planners to focus on critical products.

  C. it provides better order quantities than the economic order quantity (EOQ).

  D. it allows the firm to utilize time-phased order point (TPOP).

  Correct Answer: B

  ABC classification is a method of inventory management that categorizes items based on their annual consumption value, which is the product of the annual demand and the unit cost. Items with high annual consumption value are classified

  as A items, items with medium annual consumption value are classified as B items, and items with low annual consumption value are classified as C items.

  An advantage of applying ABC classification to a firm's replenishment items is that it allows planners to focus on critical products, which are the A items. These items have the highest impact on the firm's profitability and customer satisfaction,

  and therefore require more attention and control. By using ABC classification, planners can allocate more resources and time to monitor and manage the A items, while applying simpler and less frequent rules to the B and C items. This can

  improve the inventory performance and efficiency of the firm.

  The other options are not correct because:

  it distinguishes independent demand from dependent demand. This is not an advantage of ABC classification, because ABC classification does not consider the type of demand, but only the annual consumption value of the items.

  Independent demand is the demand for finished products or services, while dependent demand is the demand for components or materials that are used to produce the finished products or services

  it provides better order quantities than the economic order quantity (EOQ). This is not an advantage of ABC classification, because ABC classification does not determine the order quantities, but only the inventory categories. EOQ is a

  formula that calculates the optimal order quantity that minimizes the total inventory costs, such as ordering costs and holding costs.

  it allows the firm to utilize time-phased order point (TPOP). This is not an advantage of ABC but only the inventory management policies. TPOP is a system that determines the order point and the order quantity for each item based on the

  forecasted demand and the planned receipts over a specified time horizon.

• Question 110:

  The time spent In queue by a specific manufacturing job is determined by which of the following factors related to the order?

  A. Lot size

  B. Priority

  C. Setup time

  D. Run time

  Correct Answer: B

  The time spent in queue by a specific manufacturing job is determined by the priority of the order. Priority is the relative importance or urgency of an order compared to other orders in the system. Priority can be assigned based on various criteria, such as due date, customer preference, profitability, or first-come-first-served. Priority determines the order in which jobs are processed at each workstation and affects the waiting time and flow time of each job. Higher priority jobs have shorter waiting times and lower priority jobs have longer waiting times. Priority can be used as a tool to manage the trade-offs between customer service, capacity utilization, and inventory levels.

  References : Managing Supply Chain Operations, Chapter 7: Scheduling and Sequencing, Section 7.2: Priority Rules CPIM ontent Manual, Module 6: Detailed Schedules, Section 6.2: Scheduling and Sequencing, Subsection 6.2.2: Priority Rules