APICS APICS Certifications CPIM Questions & Answers

• Question 61:

  A plant uses a level production strategy due to the high costs of hiring and letting go of skilled employees. The constrained resource is due to be upgraded in the fourth month of the planning horizon, and that will reduce capacity for that month by 17%.

  Which of the following actions would be appropriate in this situation to maintain current levels of customer service and gross margin?

  A. Increase planned production for the next three periods.

  B. Defer the upgrade to a period beyond the planning time fence.

  C. Increase planned production from the fifth period on.

  D. Defer the upgrade to the period in which the highest stock level is planned.

  Correct Answer: A

  A level production strategy is a manufacturing strategy where a company produces a fixed number of products at a fixed rate1. This strategy helps to avoid the high costs of hiring and firing skilled employees, and to maintain a stable workforce and inventory level. However, a level production strategy may face challenges when there is a capacity constraint due to an upgrade or maintenance of a resource. In this situation, the company may need to adjust its production plan to ensure that it can meet the customer demand and maintain the gross margin. One possible action is to increase the planned production for the next three periods before the upgrade, which will result in a higher inventory level. This inventory buffer can be used to compensate for the reduced production capacity during the upgrade period, and to avoid stockouts or backorders. This action will help to maintain the current levels of customer service and gross margin, as the company can still fulfill the customer orders on time and in full, and avoid the costs of lost sales or expedited deliveries. Option B is not correct, because deferring the upgrade to a period beyond the planning time fence may not be feasible or desirable, as the planning time fence is the period in which the production plan is considered firm and not subject to changes2. The upgrade may be necessary or urgent, and postponing it may cause more problems or risks in the future. Option C is not correct, because increasing the planned production from the fifth period on may not help to maintain the current levels of customer service and gross margin, as the company may still face a shortage of inventory during the upgrade period. Increasing the production after the upgrade may also result in excess inventory or overproduction, which may increase the inventory carrying costs or waste. Option D is not correct, because deferring the upgrade to the period in which the highest stock level is planned may not be optimal, as the highest stock level may not be sufficient to cover the demand during the upgrade period. Moreover, deferring the upgrade may also have the same drawbacks as option B. References: 1 Guide to Level Production Strategy - Welp Magazine 3 2 Planning Time Fence | SAP Help Portal 4

• Question 62:

  Which of the following techniques would a group use to prioritize problems?

  A. Critical path analysis

  B. Pareto analysis

  C. Scatter charts

  D. Cause-and-effect diagrams

  Correct Answer: B

  Pareto analysis is a technique for separating input factors with the greatest impact on an outcome and prioritizing them based on their scores. It is based on the 80-20 rule, which states that 80% of a project's benefit or problems can be achieved by doing 20% of the work or fixing 20% of the causes. Pareto analysis helps to identify the top portion of causes that need to be addressed to resolve the majority of problems. Pareto Analysis - Overview, Limitations, Pareto Diagram References: Pareto analysis - Wikipedia, What Is Pareto Analysis? How to Create a Pareto Chart and Example, APICS CPIM Part 1 ontent Manual (page 14)

• Question 63:

  Which of the following benefits typically will be realized when switching from a functional to a cellular layout?

  A. Equipment utilization will be higher.

  B. Quality inspections will be reduced.

  C. Capital expenditures will be reduced.

  D. Products will have faster throughput.

  Correct Answer: D

  A cellular layout is a workplace organization in which processes are organized by the product or product family, rather than by the type of work (function). A cellular layout consists of cells, which are groups of machines or workstations that are located close to each other and perform all the operations required for a product or product family. A cellular layout has several advantages over a functional layout, such as reduced material handling, improved quality, increased flexibility, and enhanced employee involvement. One of the main benefits of a cellular layout is that products will have faster throughput. Throughput is the rate at which products are produced and delivered to the customers. A cellular layout can increase the throughput by reducing the travel distance, the waiting time, and the setup time for the products. A cellular layout can also improve the production flow, the synchronization, and the visibility of the products. The other options are not correct, as they are not the typical benefits of switching from a functional to a cellular layout, but rather possible drawbacks or trade-offs of switching from a functional to a cellular layout: Equipment utilization will be higher: This is unlikely to be true, as a cellular layout may result in lower equipment utilization than a functional layout. Equipment utilization is the ratio of the actual output of a machine to its maximum possible output. A cellular layout may reduce the equipment utilization by dedicating some machines to specific products or product families, which may limit the sharing of machines across different products or product families. A cellular layout may also reduce the equipment utilization by balancing the workload among the machines within a cell, which may prevent some machines from operating at their full capacity. Quality inspections will be reduced: This may or may not be true, depending on the quality level and the quality control system of the production process. A cellular layout may reduce the quality inspections by improving the quality of the products, as the workers in a cell are more responsible, skilled, and empowered to perform the operations and to detect and correct the defects. However, a cellular layout may also increase the quality inspections by requiring more frequent and rigorous checks of the products, as the products move from one cell to another or from one stage to another. Capital expenditures will be reduced: This is unlikely to be true, as a cellular layout may result in higher capital expenditures than a functional layout. Capital expenditures are the costs of acquiring or upgrading the fixed assets, such as machines, equipment, or facilities. A cellular layout may increase the capital expenditures by requiring more machines or equipment to create the cells, especially if the machines or equipment are specialized or customized for specific products or product families. A cellular layout may also increase the capital expenditures by requiring more space or facilities to accommodate the cells, especially if the cells are dispersed or isolated from each other. References : [CPIM Part 2 - Section B - Topic 4 - Sustainability] Cellular Manufacturing: Definition, Examples and Advantages -- Katana Cellular or Functional Layout? - IGI Global Functional Layout - Velaction What is cell layout - Studybuff.com

• Question 64:

  One advantage of adopting a supply network perspective Is that it:

  A. protects global markets.

  B. enhances understanding of competitive and cooperative forces.

  C. defines the market relationships and partnerships.

  D. encourages rivals to collaborate.

  Correct Answer: B

  One advantage of adopting a supply network perspective is that it enhances understanding of competitive and cooperative forces. A supply network perspective is a holistic view of the supply chain that considers the interdependencies and interactions among the various entities involved in the flow of materials, information, and money. A supply network perspective helps to identify the sources of value creation and capture, the opportunities and threats in the market, and the potential synergies and conflicts among the supply chain partners. A supply network perspective also helps to design and implement effective strategies and tactics to achieve competitive advantage and customer satisfaction. The other statements are not advantages of adopting a supply network perspective. Protecting global markets, defining market relationships and partnerships, and encouraging rivals to collaborate are possible outcomes or objectives of adopting a supply network perspective, but they are not the benefits of the perspective itself. References: Supply Network Perspective | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM

• Question 65:

  Fishbone diagrams would help a service organization determine:

  A. the proper level of service for a customer segment.

  B. the source of a quality-of-service issue.

  C. differences in the performance of employees.

  D. the decomposition of customer return rates with seasonality.

  Correct Answer: B

  Fishbone diagrams would help a service organization determine the source of a quality-of-service issue. A fishbone diagram, also known as a cause-and-effect diagram or an Ishikawa diagram, is a tool for identifying and analyzing the root causes of a problem or an effect. It uses a fish-shaped diagram to display the potential causes of a problem in different categories, such as people, processes, equipment, environment, etc. A fishbone diagram can help a service organization to determine the source of a quality-of-service issue by allowing the organization to brainstorm and organize the possible factors that may affect the quality of the service delivered to the customers, such as staff training, customer feedback, service standards, equipment maintenance, etc. A fishbone diagram can also help the organization to prioritize and test the most likely causes, and to develop and implement solutions to improve the quality of service. References: What is a Fishbone Diagram Ishikawa Cause and Effect Diagram | ASQ 3 2 CPIM Exam References - Association for Supply Chain Management 1

• Question 66:

  What is the main negative effect of changing the due dates of open orders?

  A. The schedule information becomes inaccurate.

  B. The customer service level decreases.

  C. It leads to "nervousness" in the schedule.

  D. The schedule does not support demand.

  Correct Answer: C

  Changing the due dates of open orders is a common practice to cope with demand fluctuations, capacity constraints, or material shortages. However, it can have a negative effect on the stability and reliability of the schedule, causing "nervousness". Nervousness is the tendency of the schedule to change frequently and significantly due to minor changes in inputs or parameters. Nervousness can result in increased costs, reduced efficiency, lower quality, and lower customer satisfaction. To avoid or reduce nervousness, some strategies are: using time fences, freezing the schedule, aggregating the demand, and using safety stock or safety time.

  References : CPIM ontent Manual, Module 5: Detailed Schedules, Section 5.1: Capacity Management, p. 18 Manufacturing Planning and Control for Supply Chain Management, Chapter 9: Capacity Planning and Management, Section 9.3: Capacity Planning and Scheduling, pp. 222-223

• Question 67:

  Which of the following activities is an example of collaboration between suppliers and operations which would give more lead time visibility?

  A. Conducting a facility tour for a supplier

  B. Sharing of demand data with a supplier

  C. Sending the supplier an annual forecast for materials

  D. Conducting a qualification meeting with the supplier of a new material

  Correct Answer: B

  Sharing of demand data with a supplier is an example of collaboration between suppliers and operations which would give more lead time visibility. This is because it allows the supplier to plan and adjust their production and delivery

  schedules according to the customer's needs, reducing the risk of stockouts or excess inventory. It also enables the supplier to provide feedback and suggestions to improve the demand planning process and the accuracy of the forecasts.

  Sharing of demand data is a key component of supplier relationship management (SRM) and collaborative planning, forecasting, and replenishment (CPFR).

  References :

  CPIM ontent Manual, Module 4: Supply, Section 4.2: Supplier Relationship Management, p. 15

  Essentials of Supply Chain Management, Chapter 6: Demand Planning and Forecasting, Section 6.4:

  Collaborative Planning, Forecasting, and Replenishment, pp. 101-103

• Question 68:

  Based on the above table, calculate the mean absolute deviation (MAD).

  

  A. -25

  B. 6.25

  C. 18.75

  D. 20

  Correct Answer: B

  The mean absolute deviation (MAD) is a measure of variability that indicates the average distance between observations and their mean. MAD uses the original units of the data, which simplifies interpretation. Larger values signify that the data points spread out further from the average. Conversely, lower values correspond to data points bunching closer to it. The mean absolute deviation is also known as the mean deviation and average absolute deviation. The formula for the mean absolute deviation is the following: MAD = (|X - X|) / N Where: X = the value of a data point X = the mean of the data points |X-X| = the absolute deviation of a data point from the mean N = the number of data points = the summation symbol Based on the table, we can calculate the MAD as follows: X = (80 + 50 + 50 + 75) / 4 = 63.75 |X-X| = |80 - 63.75|, |50 - 63.75|, |50 - 63.75|, |75 - 63.75| = 16.25, 13.75, 13.75, 11.25 MAD = (16.25 + 13.75 + 13.75 + 11.25) / 4 = 6.25 Therefore, the correct answer is B. References = 1 CPIM Part 2 ontent Manual, Domain 3: Plan and Manage Demand, Task 3.1: Develop, validate, and review demand plans, p. 23.

• Question 69:

  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

  Correct Answer: D

  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 70:

  Which of the following strategies is most appropriate for a business unit with a low relative market share in a high-growth market?

  A. Using excess cash generated to fund other business units

  B. Investing in the acquisition of competitors

  C. Investing in projects to maintain market share

  D. Designing product improvements to protect market share

  Correct Answer: C

  For a business unit with a low relative market share in a high-growth market, the most appropriate strategy is investing in projects to maintain market share. In a high-growth market, opportunities for expanding or solidifying market share are significant. A business unit with a low market share can benefit from investing in projects that enhance its competitive position, such as improving operational efficiency, innovation in products or services, and marketing efforts. These investments aim to strengthen the unit's market presence and capitalize on the growth potential of the market. This approach is more suitable than using excess cash for other units, acquiring competitors, or just focusing on product improvements, as it directly addresses the need to build a stronger market position in a growing market.