APICS CPIM Online Practice Questions and Exam Preparation

APICS CPIM Online Questions & Answers

• Question 141:

  To satisfy the financial auditors that the inventory records represent the value of the inventory, this is the purpose of:

  A. Evolutionary inventory
  B. Functional inventory
  C. Physical inventory
  D. Periodic inventory
  D. Periodic inventory

• Question 142:

  For a process that is outside its upper control limit (UCL), which of the following techniques would best be used to return the process under control?

  A. Conduct a Pareto analysis
  B. Plan-do-check-action (PDCA)
  C. Plot histograms
  D. Monitor control charts
  B. Plan-do-check-action (PDCA)

  ---

  Explanation/Reference:

  Plan-do-check-action (PDCA) is a technique that would best be used to return a process under control when it is outside its upper control limit (UCL). PDCA is a four-step cycle of continuous improvement that involves planning a change, implementing the change, checking the results, and acting on the findings. PDCA can help identify and eliminate the root causes of variation, improve the process performance, and prevent the recurrence of problems. PDCA is also known as the Deming cycle or the Shewhart cycle.

• Question 143:

  One way to mitigate liability risk in the supply chain is to:

  A. negotiate lower component cost.
  B. require traceability for components.
  C. push inventory to supplier locations.
  D. use less-than-truckload (LTL) shipments more frequently.
  B. require traceability for components.

  ---

  Explanation/Reference:

  One way to mitigate liability risk in the supply chain is to require traceability for components. Liability risk is the risk that a party may be held responsible for certain types of losses caused by its actions or products to third parties. Traceability is the ability to track the origin, history, location, and movement of a product or a component through the supply chain. Requiring traceability for components can help to mitigate liability risk in the supply chain by enabling the identification and verification of the quality, safety, and compliance of the components, as well as the detection and prevention of counterfeit, defective, or hazardous components. Traceability can also facilitate the recall, repair, or replacement of faulty components, and the allocation of responsibility and accountability among the supply chain partners in case of a liability claim. References: What is a Liability Risk? - Definition from Insuranceopedia 5 2 Traceability - Wikipedia 6 3 Supply Chain Liability in the Corporate Sustainability Due Diligence ... 7 4 CPIM Exam References - Association for Supply Chain Management 8

• Question 144:

  If all other factors remain the same, when finished goods inventory investment is increased, service levels typically will:

  A. remain the same.
  B. increase in direct (linear) proportion.
  C. increase at a decreasing rate.
  D. increase at an increasing rate.
  C. increase at a decreasing rate.

  ---

  Explanation/Reference:

  Increasing finished goods inventory investment will improve service levels by reducing the probability of stockouts. However, the relationship between inventory and service level is not linear, but rather asymptotic. This means that as inventory increases, service level increases at a decreasing rate, approaching a maximum value. Therefore, option C is correct. Option A is incorrect because service level will not remain the same when inventory changes. Option B is incorrect because service level will not increase in direct proportion to inventory. Option D is incorrect because service level will not increase at an increasing rate as inventory increases.

• Question 145:

  Risk pooling would work best for items with:

  A. low demand uncertainty and short lead times.
  B. low demand uncertainty and long lead times.
  C. high demand uncertainty and short lead times.
  D. high demand uncertainty and long lead times.
  D. high demand uncertainty and long lead times.

  ---

  Explanation/Reference:

  Risk pooling is the concept of reducing the variability in demand for raw materials or finished goods by aggregating demand across multiple locations or products1. By doing so, the demand fluctuations are more likely to cancel out each other, resulting in a lower safety stock and inventory cost. Risk pooling works best for items with high demand uncertainty and long lead times, because these items have the highest risk of stockouts and the highest inventory holding cost. If the demand uncertainty is low, there is less need for risk pooling, as the demand can be easily forecasted and met. If the lead time is short, the replenishment orders can be placed more frequently and adjusted to the actual demand, reducing the need for safety stock and risk pooling

• Question 146:

  The cost accountant has discovered a consistent overage in actual run time for one operation. This information should be sent first to the:

  A. product manager to increase the selling price of the product.
  B. quality manager to add a new quality measurement to the operation.
  C. production supervisor to review and explain the overage.
  D. the engineering manager to evaluate the run time for the routing.
  C. production supervisor to review and explain the overage.

  ---

  Explanation/Reference:

  The production supervisor is the most appropriate person to send the information about the overage in actual run time for one operation. The production supervisor is responsible for overseeing the execution of the production plan and ensuring that the operations are performed efficiently and effectively. The production supervisor can review the actual run time data and compare it with the planned run time, identify the possible causes of the overage, and take corrective actions if needed. The production supervisor can also explain the overage to the cost accountant and other stakeholders, such as the product manager, the quality manager, and the engineering manager, and provide feedback for improving the planning and routing of the operation.

  References: APICS CPIM Part 2 Exam Content Manual, p. 30 [APICS CPIM Learning System Version 8.0], Module 4, Section D, p. 4-35

• Question 147:

  A schedule (priority plan) that establishes to show the components required at each level of the assembly and based on lead time, calculates the time when these component will be needed called:

  A. Material Requirements Planning
  B. Master Production Schedule
  C. Inventory control Planning
  D. B and C
  A. Material Requirements Planning

• 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
  C. Level of output to be produced

  ---

  Explanation/Reference:

  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 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
  B. Backflushing

  ---

  Explanation/Reference:

  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 150:

  Which of the following statements characterizes a pull system In distribution management?

  A. Each warehouse makes its own replenishment decisions.
  B. It uses distribution requirements planning(DRP).
  C. It uses uniform performance measures.
  D. It uses fair-share allocation.
  A. Each warehouse makes its own replenishment decisions.

  ---

  Explanation/Reference:

  A pull system in distribution management is a method of inventory replenishment that is driven by the actual demand of the customers, rather than by forecasts or schedules. In a pull system, each warehouse makes its own replenishment decisions based on the inventory level and the customer orders. A pull system reduces the risk of overstocking or understocking inventory, as it responds to the real-time demand fluctuations. A pull system also improves the efficiency and flexibility of the distribution network, as it eliminates the need for centralized planning and coordination. A pull system is suitable for products that have high demand uncertainty, low holding costs, or short lead times. References: Push vs. Pull Inventory Management Systems 2023 | Business.org, Push vs. pull: Inventory management for distribution businesses