APICS CPIM Online Practice Questions and Exam Preparation

APICS CPIM Online Questions & Answers

• Question 151:

  _______________ is concerned with the production of high-volume standard products.

  A. Continuous manufacturing
  B. Flow manufacturing
  C. Repetitive manufacturing
  D. None of the above
  B. Flow manufacturing

• Question 152:

  Reducing distribution network inventory days of supply will have which of the following Impacts?

  A. Increase turnovers and increase cash-to-cash cycle time.
  B. Increase turnovers and reduce cash-to-cash cycle time.
  C. Decrease turnovers and reduce cash-to-cash cycle time.
  D. Decrease turnovers and increase cash-to-cash cycle time.
  B. Increase turnovers and reduce cash-to-cash cycle time.

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  Explanation/Reference:

  Inventory days of supply (IDS) is a measure of how long it takes for a company to sell its entire inventory. Reducing IDS means that the company is selling its inventory faster, which increases the inventory turnover ratio. Inventory turnover ratio is the number of times a company sells and replaces its inventory in a given period. A higher inventory turnover ratio indicates that the company is more efficient in managing its inventory and generating sales. Reducing IDS also means that the company is reducing the time between paying its suppliers and receiving payment from its customers, which reduces the cash-to-cash cycle time. Cash-to-cash cycle time is the number of days a company's cash is tied up in its operations. A lower cash-to-cash cycle time indicates that the company is more efficient in converting its inventory into cash and improving its liquidity. Therefore, reducing distribution network inventory days of supply will have the impact of increasing turnovers and reducing cash-to-cash cycle time. References: Gartner's Top Actions for Supply Chain Inventory Reduction Inventory Days Of Supply | Supply Chain KPI Library | Profit.co Maximizing Efficiency: Understanding Inventory Days of Supply in - oboloo

• Question 153:

  When the discrete available-to-promise (ATP) method is used, the master production receipt quantity is committed to:

  A. any request for shipment prior to the planning time fence.
  B. any request for shipment prior to the demand time fence (DTF).
  C. requests only for shipment before the next master production schedule (MPS) receipt.
  D. requests only for shipment in the period of the receipt.
  C. requests only for shipment before the next master production schedule (MPS) receipt.

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  Explanation/Reference:

  The discrete available-to-promise (ATP) method is a calculation based on the available-to-promise figure in the master schedule. For the first period, the ATP is the sum of the beginning inventory plus the MPS quantity minus backlog for all periods until the item is master scheduled again. For other periods, the quantity that is available for an item is based on the quantity available within an individual purchase. Therefore, the master production receipt quantity is committed to requests only for shipment before the next MPS receipt.

  References: APICS CPIM Part 2 Exam Content Manual, Version 8.0, p. 29 NetSuite Applications Suite - Available to Promise Methods

• Question 154:

  Which of the following methods would be appropriate for forecasting the demand for a product family when there is a significant trend and seasonality in the demand history?

  A. Econometric models
  B. Computer simulation
  C. Time series decomposition
  D. Weighted moving average
  C. Time series decomposition

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  Explanation/Reference:

  Time series decomposition is a method that breaks down a time series of historical demand data into its components: trend, seasonality, cyclical, and random. It is appropriate for forecasting the demand for a product family when there is a significant trend and seasonality in the demand history, as it can isolate and estimate these components and project them into the future. Time series decomposition can also handle cyclical and random variations in demand, and it can be applied to different time intervals (such as monthly, quarterly, or yearly). The other methods are not suitable for this scenario. Econometric models are complex mathematical models that use regression analysis to relate demand to various explanatory variables, such as price, income, or advertising. They are not designed to capture trend and seasonality in demand. Computer simulation is a technique that uses a computer program to mimic the behavior of a real system under different scenarios and assumptions. It is not a forecasting method per se, but rather a tool for testing and evaluating different forecasting methods or policies. Weighted moving average is a simple method that uses the average of the most recent observations as the forecast for the next period, with more weight given to the recent observations than the older ones. It is not able to capture trend and seasonality in demand, as it assumes that demand is stable and does not change over time. References: Time Series Decomposition | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

• Question 155:

  The material planner works with the type of orders

  A. Four
  B. Three
  C. Seven
  D. Two
  B. Three

• Question 156:

  Which of the following criteria is used to determine safety stock in a distribution center (DC)?

  A. Economic order quantity(EOQ)
  B. Seasonal index value
  C. Alpha factor level
  D. Probability of stocking out
  D. Probability of stocking out

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  Explanation/Reference:

  The probability of stocking out is the likelihood that the demand for an item will exceed the available inventory during a given period. It is one of the criteria used to determine safety stock in a distribution center (DC), as safety stock is inventory that is carried to protect against forecast errors and fluctuations in demand or supply. The higher the probability of stocking out, the more safety stock is needed to avoid customer dissatisfaction and lost sales. The other criteria are not directly related to safety stock. Economic order quantity (EOQ) is the order quantity that minimizes the total inventory holding and ordering costs. Seasonal index value is a measure of how demand varies according to different seasons or periods. Alpha factor level is a parameter used in exponential smoothing to adjust the forecast based on the error between the actual and forecasted demand. References: Safety Stock: A Contingency Plan to Keep Supply Chains Flying High, APICS CPIM 8 Planning and Inventory Management | ASCM

• Question 157:

  To check the feasibility of the master Production Planning, provide warnings to any bottlenecks; ensure utilization of work centers and advice vendors of capacity requirements is the purpose of:

  A. Realistic capacity planning
  B. Expected capacity planning
  C. Rough-cut capacity planning
  D. Work-capacity planning
  C. Rough-cut capacity planning

• Question 158:

  Increased use of third-party logistics (3PL) services is likely to have which of the following effects on a firm's balance sheet?

  A. Decreased fixed assets
  B. Decreased retained earnings
  C. Increased accounts receivable
  D. Increased intangible assets
  A. Decreased fixed assets

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  Explanation/Reference:

  Third-party logistics (3PL) services are external providers that handle various supply chain functions for a firm, such as transportation, warehousing, inventory management, and order fulfillment. By outsourcing these functions to a 3PL, a firm can reduce its investment in fixed assets, such as trucks, trailers, warehouses, and equipment. This can improve the firm's liquidity and return on assets ratios, as well as lower its depreciation and maintenance costs. However, usinga 3PL does not necessarily affect the firm's retained earnings, accounts receivable, or intangible assets, which are influenced by other factors, such as profitability, sales, and goodwill.

• Question 159:

  The length of time from when material enters a production facility until it exists, this is known as: A. throughput time

  B. workforce time
  C. creation time
  D. assembly time
  A

• Question 160:

  For a company that uses first in, first out (FIFO) inventory accounting, the actual use in production of a recently arrived shipment of more expensive components rather than lower-cost components

  previously received will have which of the following results?

  A. Higher cost of goods sold (COGS)
  B. Lower COGS
  C. No change to COGS
  D. A violation of FIFO rules
  A. Higher cost of goods sold (COGS)

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  Explanation/Reference:

  FIFO inventory accounting assumes that the first items purchased or produced are the first ones sold or used. Therefore, the cost of goods sold reflects the oldest costs of inventory. If a company uses a more expensive shipment of components instead of the lower-cost ones that were previously received, it will increase the cost of goods sold and reduce the gross profit margin. This is because the newer components have a higher unit cost than the older ones, and the cost of goods sold is calculated by multiplying the unit cost by the number of units sold or used. References:

  PIM Part 1 Exam Content Manual, page 17, section 3.2.1: "Explain the impact of inventory valuation methods (for example, first in, first out [FIFO], last in, first out [LIFO], average cost, standard cost) on financial statements and taxes."

  PIM Part 1 Study Guide, page 63, section 3.2.1: "The FIFO method assumes that the first goods purchased or produced are the first goods sold. The cost of goods sold is based on the oldest costs, and the ending inventory is based on the most recent costs. The FIFO method results in a higher net income and a higher ending inventory value in a period of rising prices."