APICS APICS Certifications CPIM Questions & Answers

• Question 11:

  Which of the following capacity planning methods uses the master production schedule (MPS) as its primary input?

  A. Resource planning

  B. Rough-cut capacity planning (RCCP)

  C. Finite loading

  D. Input/output analysis

  Correct Answer: B

  Rough-cut capacity planning (RCCP) is a type of capacity planning method that uses the master production schedule (MPS) as its primary input. RCCP is a technique for checking the feasibility of the MPS by comparing the available capacity of critical resources (such as machines, labor, or materials) with the capacity required by the MPS. RCCP helps to identify and resolve any potential capacity problems or bottlenecks at an aggregate level, before committing to the MPS. RCCP can also be used to evaluate alternative MPS scenarios and to support the sales and operations planning (SandOP) process

• Question 12:

  The question below is based on the following standard and actual data of a production order

  

  Which of the following statements about variances is true?

  A. The material price vanance for Component A is favorable by S10

  B. The labor pnce variance is unfavorable by S20

  C. The material usage variance for Component B is favorable by $36

  D. The labor efficiency variance is favorable by S20

  Correct Answer: D

  The labor efficiency variance is the difference between the standard labor hours allowed for the actual output and the actual labor hours used, multiplied by the standard labor rate. In this case, the standard labor hours allowed for 100 pieces are 0.5 * 100 = 50 hours. The actual labor hours used are 48 hours. The standard labor rate is $10 per hour. Therefore, the labor efficiency variance = (50 - 48) * $10 = $20 favorable. This means that the actual labor hours used were less than the standard labor hours allowed, which indicates a higher labor efficiency

• Question 13:

  The demand for an item has increasing forecast error, whereas all other factors remain constant. Which of the following remains constant while maintaining the same customer service level?

  A. Reorder point(ROP)

  B. Safety stock

  C. Inventory investment

  D. Safety factor

  Correct Answer: D

  Safety factor is a multiplier that is applied to the standard deviation of demand to determine the safety stock level. Safety factor remains constant while maintaining the same customer service level, as it reflects the desired probability of not stocking out. The higher the safety factor, the higher the customer service level, and vice versa. The other factors do not remain constant while maintaining the same customer service level. Reorder point (ROP) is the inventory level that triggers a replenishment order. ROP increases with increasing forecast error, as more safety stock is needed to cover the demand uncertainty. Safety stock is the inventory that is carried to protect against forecast errors and demand fluctuations. Safety stock increases with increasing forecast error, as more buffer is needed to avoid stockouts. Inventory investment is the total value of the inventory that is held in the system. Inventory investment increases with increasing forecast error, as more inventory is required to maintain the same customer service level. References: Safety Factor | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

• Question 14:

  The production plan relates to a firm's financial planning because it is used to:

  A. calculate standard product costs.

  B. determine variable costs.

  C. project payroll costs.

  D. identify future cash needs.

  Correct Answer: D

  The production plan relates to a firm's financial planning because it is used to identify future cash needs. The production plan is a plan that specifies the quantity and timing of production for each product or product family. It is derived from the sales and operations plan, which is the output of the SandOP process. The production plan affects the firm's financial planning because it determines the amount of cash that is needed to purchase materials, pay labor, and cover overhead costs. The production plan also affects the amount of cash that is generated from sales, as it influences the delivery time and customer service level. Therefore, the production plan helps to forecast the cash inflows and outflows, and to plan for the financing and investing activities of the firm. The other statements are not true about the production plan. The production plan does not calculate standard product costs, as standard product costs are predetermined costs that are based on the expected inputs and outputs of production. The production plan does not determine variable costs, as variable costs are costs that vary with the level of production. The production plan does not project payroll costs, as payroll costs are part of the labor budget, which is derived from the production budget. References: Production Plan | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

• Question 15:

  A manufacturer has a forecasted annual demand of 1,000,000 units for a new product. They have to choose 1 of 4 new pieces of equipment to produce this product. Assume that revenue will be $10 per unit for all 4 options.

  Which machine will maximize their profit if the manufacturer anticipates market demand will be steady for 3 years and there is no residual value for any of the equipment choices?

  MachineFixed CostVariable Cost per UnitAnnual Capacity

  AS100.000$6 00800,000 units

  B$200,000$5 501.000,000 units

  C$250,000$5 001,200,000 units

  D$1 000.000$4 501 400.000 units

  A. Machine A

  B. Machine B

  C. Machine C

  D. Machine D

  Correct Answer: C

  To maximize profit, the manufacturer should choose the machine that has the lowest total cost per unit of demand. The total cost per unit of demand is calculated by adding the fixed cost per unit of demand and the variable cost per unit. The fixed cost per unit of demand is obtained by dividing the fixed cost by the annual demand. The variable cost per unit is given in the table. The total cost per unit of demand for each machine is:

  Machine A: 1,000,000100,000+6.00=6.10

  Machine B: 1,000,000200,000+5.50=5.70

  Machine C: 1,000,000250,000+5.00=5.25

  Machine D: 1,000,0001,000,000+4.50=5.50

  The lowest total cost per unit of demand is for Machine C, which is $5.25. Therefore, Machine C will maximize the profit for the manufacturer.

  References: Some possible references for this question are: CPIM Part 1 ontent Manual, Version 8.0, Domain 3: Plan and Manage Supply, Section A: Plan and Manage Supply Chain Capacity, Topic 2: Capacity Planning Concepts, Subtopic b: Capacity planning methods, Page 30 CPIM Part 1 Learning System, Version 8.0, Module 3: Plan and Manage Supply, Section 3.2: Capacity Planning Concepts, Topic 3.2.2: Capacity Planning Methods, Subtopic 3.2.2.2: Cost-Volume Analysis, Pages 3-24 to 3-26 CPIM Part 1 Study Guide, Version 8.0, Module 3: Plan and Manage Supply, Section 3.2: Capacity Planning Concepts, Topic 3.2.2: Capacity Planning Methods, Subtopic 3.2.2.2: Cost-Volume Analysis, Pages 3-24 to 3-26

• Question 16:

  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.

  Correct Answer: C

  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 17:

  In pyramid forecasting, the "roll up" process begins with:

  A. combining individual product item forecasts into forecasts for product families.

  B. combining forecasts for product families into a total business forecast.

  C. allocating total business forecast changes to product families.

  D. allocating product family forecast changes to individual products.

  Correct Answer: A

  Pyramid forecasting is a method of forecasting that uses a hierarchical structure of data to improve the accuracy and consistency of the forecasts. The lowest level of the pyramid represents the most detailed data, such as individual product items, while the higher levels represent more aggregated data, such as product families or total business. The "roll up" process is the process of aggregating the forecasts from the lower level to the higher level, starting with the most detailed level. This process helps to align the forecasts across different levels and reduce the forecast error

• Question 18:

  During the sales and operations planning (SandOP) process, which of the following tasks is the primary responsibility of the functional representatives on the supply planning team?

  A. Identifying reasons why the demand plan is not realistic

  B. Communicating when an event will prevent meeting the supply plan

  C. Ensuring that the functional objectives are considered when developing the plans

  D. Understanding how to use the plan to improve functional performance

  Correct Answer: C

  The supply planning team is responsible for developing a supply plan that balances the demand plan with the available resources and capacities. The functional representatives on the supply planning team, such as production, procurement, engineering, and finance, need to ensure that their functional objectives are considered when developing the plans. For example, production needs to consider the impact of the supply plan on the production schedule, capacity utilization, and labor requirements. Procurement needs to consider the impact of the supply plan on the supplier relationships, lead times, and inventory levels. Engineering needs to consider the impact of the supply plan on the product design, quality, and innovation. Finance needs to consider the impact of the supply plan on the costs, revenues, and profitability. By ensuring that the functional objectives are considered, the supply planning team can create a feasible and optimal supply plan that aligns with the overall business strategy

• Question 19:

  A company confirms a customer order based on available capacity and inventory, even though the current production plan does not cover the entire order quantity. This situation is an example of what type of order fulfillment policy?

  A. Assemble-to-order (ATO)

  B. Capable-to-promise (CTP)

  C. Available-to-promise (ATP)

  D. Configure-to-order (CTO)

  Correct Answer: B

  Capable-to-promise (CTP) is a type of order fulfillment policy that confirms a customer order based on the available capacity and inventory, as well as the current production plan and schedule. CTPcalculates the earliest possible delivery date for a customer order, considering the existing demand and supply situation. CTP allows a company to accept an order that exceeds the current available inventory, as long as it can produce the remaining quantity within the customer's requested delivery time. CTP helps to improve customer service, reduce inventory costs, and increase production efficiency.

• Question 20:

  Which of the following stock location systems would you use in a repetitive manufacturing, lean environment?

  A. Fixed location

  B. Floating location

  C. Point-of-use storage

  D. Central storage

  Correct Answer: C

  Point-of-use storage is a stock location system that places inventory close to where it is needed or consumed in the production process. This reduces waste, handling, and transportation costs, and improves material flow and visibility. Pointof-use storage is a key element of a lean environment, where inventory is minimized and replenished frequently based on demand signals.