APICS APICS Certifications CPIM Questions & Answers

• Question 141:

  A company implementing a localized multi-country strategy to increase market share should engage in which of the following actions?

  A. Sell different product versions in different countries under different brand names.

  B. Sell the same products under the same brand name worldwide.

  C. Locate plants on the basis of maximum location advantage.

  D. Use the best suppliers regardless of geographic location.

  Correct Answer: A

  A localized multi-country strategy is a type of global strategy that involves adapting products, marketing, and operations to the specific needs and preferences of each country or region where the company operates. This strategy allows the company to increase its market share by appealing to the local customers and differentiating itself from the competitors. A localized multi-country strategy requires the company to sell different product versions in different countries under different brand names, as this reflects the high degree of customization and localization that the strategy entails. The other options are not consistent with a localized multi-country strategy, as they imply a low degree of adaptation and a high degree of standardization across the markets. Selling the same products under the same brand name worldwide is a global strategy that assumes universal customer preferences and seeks economies of scale. Locating plants on the basis of maximum location advantage is a transnational strategy that balances global integration and local responsiveness. Using the best suppliers regardless of geographic location is a sourcing strategy that does not necessarily reflect the degree of localization of the products or the marketing.

• Question 142:

  Which of the following actions best supports a company's strategic focus on delivery speed to improve competitive advantage?

  A. Maintaining high-capacity utilization

  B. Developing flexible operations

  C. Cross-training workers

  D. Implementing rapid process improvements

  Correct Answer: B

  Developing flexible operations best supports a company's strategic focus on delivery speed to improve competitive advantage. Delivery speed is the time it takes for a company to deliver its products or services to the customers after receiving an order. Delivery speed is a key factor in customer satisfaction, retention, and loyalty, as well as a source of differentiation and value creation in the market1. Developing flexible operations quickly and efficiently to customer needs and expectations. Flexible operations can improve delivery speed by reducing lead times, increasing responsiveness, enhancing quality, and minimizing costs

• Question 143:

  Given the information below, reducing which measure by 10% would contribute most to shortening the cash-to-cash cycle time?

  

  A. Accounts receivable

  B. Inventory value

  C. Accounts payable

  D. Cost of capital

  Correct Answer: B

  Reducing the inventory value by 10% would contribute most to shortening the cash-to-cash cycle time. The cash-to-cash cycle time is calculated as the days of inventory outstanding plus days of sales outstanding minus days of payables outstanding. By reducing the inventory value, the company can decrease the days of inventory outstanding, leading to a shorter cash-to-cash cycle time. This aligns with CPIM's focus on efficient inventory management to optimize the supply chain.

• Question 144:

  In a lean environment, the batch-size decision for planning "A" items would be done by:

  A. least total cost.

  B. min-max system.

  C. lot-for-lot (L4L).

  D. periodic order quantity.

  Correct Answer: C

  In a lean environment, the batch-size decision for planning "A" items would be done by lot-for-lot (L4L). L4L is an inventory management technique that orders exactly the quantity needed to meet the demand for each period. This minimizes the work in process, cycle time, and inventory holding costs. L4L is consistent with the lean principles of reducing batch sizes, eliminating waste, and responding to customer pull. The other options are not suitable for a lean environment, as they either order more than the demand (least total cost, min-max system, periodic order quantity) or incur more setup costs (least total cost, periodic order quantity).

• Question 145:

  The master schedule is an Important tool in the sales and operations planning (SandOP) process because it:

  A. represents the forecast before changes are made in SandOP.

  B. represents the forecast with less detail.

  C. balances supply and demand at the product mix level.

  D. balances supply and demand at the sales volume level.

  Correct Answer: C

  The master schedule is an important tool in the sales and operations planning (SandOP) process because it balances supply and demand at the product mix level. The master schedule is a detailed plan that specifies the quantity and timing of each end item or product family to be produced. It is derived from the aggregate production plan, which is the output of the SandOP process. The master schedule helps to translate the aggregate plan into specific product requirements and to allocate the available capacity to meet the demand. The master schedule also provides input to the material requirements planning (MRP) and capacity requirements planning (CRP) systems, which further refine the production plan at the component and resource levels. The other statements are not true about the master schedule. The master schedule does not represent the forecast before changes are made in SandOP, as the forecast is an input to the SandOP process, not an output. The master schedule does not represent the forecast with less detail, as the master schedule is more detailed than the forecast, which is usually expressed in aggregate terms. The master schedule does not balance supply and demand at the sales volume level, as the sales volume level is the level of the aggregate production plan, not the master schedule.

• Question 146:

  Forecast error typically triggers forecast revision when it is:

  A. used in computing the tracking signal.

  B. associated with the Introduction stage of the product life cycle.

  C. continually increasing.

  D. caused by random variation.

  Correct Answer: C

  Forecast error is the difference between the actual demand and the forecasted demand for a given period. Forecast error can be caused by various factors, such as changes in customer preferences, market conditions, competitor actions, or random variation. Forecast error can be measured using different methods, such as mean absolute deviation (MAD), mean absolute percentage error (MAPE), or tracking signal. Forecast error typically triggers forecast revision when it is continually increasing, which indicates that the forecast model is not capturing the underlying demand pattern or trend. A continually increasing forecast error can lead to poor customer service, excess or obsolete inventory, or lost sales opportunities. Therefore, it is important to monitor the forecast error and revise the forecast when necessary to improve the forecast accuracy and reliability. Forecast error does not trigger forecast revision when it is used in computing the tracking signal, associated with the introduction stage of the product life cycle, or caused by random variation. These are not valid reasons for revising the forecast, as they do not indicate a systematic or persistent deviation from the actual demand.

• Question 147:

  Which of the following statements is true about total productive maintenance (TPM)?

  A. It uses statistical tools.

  B. It is part of the business strategy.

  C. It influences the product design process.

  D. It minimizes unscheduled breakdowns.

  Correct Answer: D

  Total productive maintenance (TPM) is a holistic approach to equipment maintenance that strives to achieve perfect production: no breakdowns, no small stops or slow running, no defects, and no accidents. TPM emphasizes proactive and preventative maintenance to maximize the operational efficiency of equipment. It blurs the distinction between the roles of production and maintenance by placing a strong emphasis on empowering operators to help maintain their equipment. The implementation of a TPM program creates a shared responsibility for equipment that encourages greater involvement by plant floor workers. In the right environment, this can be very effective in improving productivity and quality12. One of the eight pillars of TPM is planned maintenance, which aims to reduce the frequency of breakdowns and minimize the impact of failures on production. Planned maintenance involves scheduling maintenance activities based on the actual condition of the equipment, rather than on a fixed time interval. This reduces the risk of over-maintenance or under-maintenance, and optimizes the use of resources. Planned maintenance also involves improving the maintainability and reliability of the equipment, by identifying and eliminating the root causes of failures, and implementing design changes or modifications

• Question 148:

  The production plan defines which of the following targets?

  A. Sales forecast

  B. Quantities of each product to be produced

  C. Level of output to be produced

  D. Business plans for the company

  Correct Answer: C

  The production plan is a high-level plan that defines the level of output to be produced for each product family or group in a given time period. It is based on the sales forecast, the aggregate production capacity, and the desired inventory levels. The production plan does not specify the quantities of each individual product to be produced, as this is done in the master production schedule. The production plan also does not include the sales forecast or the business plans for the company, as these are inputs to the production plan, not outputs

• Question 149:

  Which of the following systems would be the most cost-efficient for inventory management of a low value item?

  A. Order point

  B. Material requirements planning (MRP)

  C. Periodic review

  D. Economic order quantity(EOQ)

  Correct Answer: C

  Periodic review is a system that determines the order quantity and reorder point for an item based on the inventory position at fixed intervals. This system is suitable for inventory management of low value items, as it reduces the ordering and holding costs, simplifies the ordering process, and allows for grouping orders. Therefore, option C is correct. Option A is incorrect because order point is a system that triggers an order when the inventory level falls below a predetermined level. This system requires continuous monitoring of inventory levels, which may not be cost-efficient for low value items. Option B is incorrect because material requirements planning (MRP) is a system that calculates the requirements for components and materials based on the demand for end items. This system is more appropriate for items with dependent demand, rather than independent demand. Option D is incorrect because economic order quantity (EOQ) is a system that determines the optimal order quantity that minimizes the total ordering and holding costs. This system assumes constant and known demand and lead time, which may not be realistic for some items.

• Question 150:

  When starting an external benchmarking study, a firm must first:

  A. determine the metrics which will be measured and compared.

  B. identify the target firms with which to benchmark against.

  C. understand its own processes and document performance.

  D. determine its areas of weakness versus the competition's.

  Correct Answer: C

  External benchmarking is a strategic tool where a company compares its processes and performance metrics to industry bests or competitors. Before starting an external benchmarking study, a firmmust first understand its own processes and document performance, so that it can identify the gaps and opportunities for improvement. This is also a requirement for regulatory compliance. Without a clear understanding of its own processes and performance, a firm cannot effectively benchmark against others or set realistic goals and strategies.