CPIM-8.0 Exam Practice Questions prepared by APICS Professionals
Use Valid New CPIM-8.0 Questions - Top choice Help You Gain Success
NEW QUESTION # 36
Given the information below, reducing which measure by 10% would contribute most to shortening the cash-to-cash cycle time?
- A. Accounts receivable
- B. Accounts payable
- C. Cost of capital
- D. Inventory value
Answer: D
Explanation:
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. References: The concepts are covered in detail in Module
4: Inventory Management
NEW QUESTION # 37
An advantage of applying ABC classification to a firm's replenishment items is that:
- A. it allows planners to focus on critical products.
- B. it allows the firm to utilize time-phased order point (TPOP).
- C. it provides better order quantities than the economic order quantity (EOQ).
- D. it distinguishes independent demand from dependent demand.
Answer: A
Explanation:
ABC classification is a method of inventory management that categorizes items based on their annual consumption value, which is the product of the annual demand and the unit cost. Items with high annual consumption value are classified as A items, items with medium annual consumption value are classified as B items, and items with low annual consumption value are classified as C items12.
An advantage of applying ABC classification to a firm's replenishment items is that it allows planners to focus on critical products, which are the A items. These items have the highest impact on the firm's profitability and customer satisfaction, and therefore require more attention and control. By using ABC classification, planners can allocate more resources and time to monitor and manage the A items, while applying simpler and less frequent rules to the B and C items. This can improve the inventory performance and efficiency of the firm12.
The other options are not correct because:
*A. it distinguishes independent demand from dependent demand. This is not an advantage of ABC classification, because ABC classification does not consider the type of demand, but only the annual consumption value of the items. Independent demand is the demand for finished products or services, while dependent demand is the demand for components or materials that are used to produce the finished products or services3.
*C. it provides better order quantities than the economic order quantity (EOQ). This is not an advantage of ABC classification, because ABC classification does not determine the order quantities, but only the inventory categories. EOQ is a formula that calculates the optimal order quantity that minimizes the total inventory costs, such as ordering costs and holding costs.
*D. it allows the firm to utilize time-phased order point (TPOP). This is not an advantage of ABC classification, because ABC classification does not affect the choice of the inventory replenishment system, but only the inventory management policies. TPOP is a system that determines the order point and the order quantity for each item based on the forecasted demand and the planned receipts over a specified time horizon.
References := 1 ABC Inventory Analysis & Management | NetSuite1 2 What Is ABC Inventory Classification?
| Business.org2 3 Independent Demand vs Dependent Demand: What's the Difference? Economic Order Quantity (EOQ) - Overview, Formula, and Example Time-Phased Order Point (TPOP) - an overview | ScienceDirect Topics
NEW QUESTION # 38
A company implementing a localized multi-country strategy to increase market share should engage in which of the following actions?
- A. Locate plants on the basis of maximum location advantage.
- B. Sell the same products under the same brand name worldwide.
- C. Use the best suppliers regardless of geographic location.
- D. Sell different product versions in different countries under different brand names.
Answer: D
Explanation:
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. References:
CPIM Part 2 Exam Content Manual, p. 19
Multidomestic strategy: Global success through localization
Localization strategy - How to build with examples
NEW QUESTION # 39
Which of the following actions hinders the transition from a push system to a pull system?
- A. Maintaining a constant number of kanban cards during minor changes in the level of production
- B. Using work orders as a backup
- C. Using standardized containers
- D. Introducing kanban cards as authorization for material movement
Answer: B
Explanation:
A push system is a production system that relies on forecasts and schedules to plan the production and distribution of goods and services. A pull system is a production system that responds to actual customer demand and signals to trigger the production and distribution of goods and services. A transition from a push system to a pull system requires a change in the mindset and the processes of the organization, as well as the adoption of new tools and techniques to enable a demand-driven production system12.
One of the tools that is commonly used in a pull system is kanban, which is a visual signal that indicates the need for replenishment of materials or products. Kanban cards are attached to standardized containers that hold a fixed amount of inventory. When a container is empty, the kanban card is sent back to the upstream process as a signal to produce more. This way, the inventory level is controlled by the actual consumption of the downstream process, and the production is synchronized with the demand13.
One of the actions that hinders the transition from a push system to a pull system is using work orders as a backup. Work orders are documents that authorize the production of a certain quantity of a product or a service, based on a forecast or a schedule. Work orders are typical of a push system, as they are not triggered by the actual customer demand, but by the planned production. Using work orders as a backup means that the organization is not fully committed to the pull system, and still relies on the push system to ensure the availability of inventory. This can create confusion, inconsistency, and inefficiency in the production system, as well as increase the inventory holding costs and the risk of obsolescence1 .
Therefore, using work orders as a backup is the correct answer, as it is an action that hinders the transition from a push system to a pull system. The other options are actions that support the transition, as they are aligned with the principles and practices of a pull system.
NEW QUESTION # 40
Which of the following systems would be the most cost-efficient for inventory management of a low value item?
- A. Economic order quantity(EOQ)
- B. Order point
- C. Material requirements planning (MRP)
- D. Periodic review
Answer: D
Explanation:
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. References:
CPIM Part 2 Exam Content Manual, Version 8.0, Section E: Plan and Manage Inventory, Subsection E.2:
Inventory Management Methods, p. 53.
NEW QUESTION # 41
How would a master production schedule (MPS) be used In an assemble-to-order (ATO) manufacturing environment?
- A. Often In an ATO environment, the MPS is created once a year and only revised if a product is discontinued.
- B. The MPS is used to plan subassemblies and components; end items are only scheduled when a customer order is received.
- C. Subassemblies are scheduled in the MPS when the customer order is received, and production can start.
- D. Typically, the MPS is not used in companies using an ATO manufacturing strategy.
Answer: B
Explanation:
In an assemble-to-order (ATO) manufacturing environment, the MPS is used to plan subassemblies and components that have long lead times or high demand variability. These subassemblies and components are produced and stocked in anticipation of customer orders. The end items are only scheduled in the MPS when a customer order is received, and they are assembled from the available subassemblies and components. This reduces the lead time and inventory for the end items, while increasing the flexibility and responsiveness to customer needs. ATO is a hybrid strategy between make-to-stock (MTS) and make-to-order (MTO).
References :=
CPIM Exam Content Manual, Module 4: Supply, Section 4.1: Master Production Schedule, p. 14 Manufacturing Planning and Control for Supply Chain Management, Chapter 8: Master Production Scheduling, Section 8.3: Master Production Scheduling in Different Environments, pp. 191-192
NEW QUESTION # 42
We have observed the inventory system does not handle plastic parts well." What should be added to the problem statement to make it more useful?
- A. Measurements that help describe the problem
- B. Criteria for selecting the improvement team
- C. Guidance to which problem-solving tools should be used
- D. Description of who is responsible for the problem
Answer: A
Explanation:
A problem statement is a concise description of an issue to be addressed or a condition to be improved upon. It identifies the gap between the current state and the desired state of a process or a system. A good problem statement should include measurements that help describe the problem, such as the magnitude, frequency, location, and impact of the problem. These measurements can help quantify the problem and provide a baseline for improvement. The other options are not essential for a problem statement, but rather for the subsequent steps of problem-solving, such as selecting tools, forming teams, and assigning responsibilities.
References:
*[CPIM Part 2 - Section B - Topic 1 - Quality and Continuous Improvement]
*How to Write a Problem Statement
NEW QUESTION # 43
An order winner during the growth stage of a product's life cycle is:
- A. price.
- B. dependability.
- C. variety.
- D. availability.
Answer: C
Explanation:
An order winner is a product attribute that influences customers to choose one product over another. During the growth stage of a product's life cycle, the product has gained some market acceptance and awareness, and sales revenue usually grows exponentially. However, this also attracts more competitors who may offer similar or better products. Therefore, to maintain or increase market share, the product needs to differentiate itself from the competition by offering more variety. Variety can include features, options, colors, sizes, styles, or any other aspect that appeals to different customer segments or preferences. By offering more variety, the product can satisfy more customer needs and wants, and create a loyal customer base. Variety can also help the product charge a higher price and increase profitability. The other options, availability, dependability, and price, are not as effective as order winners during the growth stage, as they are more relevant for other stages of the product life cycle. Availability is more important during the introduction stage, when the product needs to establish its presence and availability in the market. Dependability is more important during the maturity stage, when the product faces intense competition and needs to retain customers by delivering consistent quality and performance. Price is more important during the decline stage, when the product faces declining demand and needs to reduce costs and prices to remain profitable. References:
The Growth Stage Of The Product Life Cycle [Explained]
Product Life Cycle - Definition, Stages, Usage
The four stages of the product life cycle
NEW QUESTION # 44
In a lean environment, the batch-size decision for planning "A" items would be done by:
- A. periodic order quantity.
- B. min-max system.
- C. least total cost.
- D. lot-for-lot (L4L).
Answer: D
Explanation:
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).
References:
*[CPIM Part 2 - Section A - Topic 3 - Lean and Just-in-Time]
*Optimize Production Batch Sizes
*How to determine your Lot Size - Part 1
NEW QUESTION # 45
Which of the following stock location systems would you use in a repetitive manufacturing, lean environment?
- A. Fixed location
- B. Point-of-use storage
- C. Floating location
- D. Central storage
Answer: B
Explanation:
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. Point-of-use storage is a key element of a lean environment, where inventory is minimized and replenished frequently based on demand signals. References: EXAM CONTENT MANUAL PREVIEW, page
15, section 7.1.2. Manufacturing Planning and Control for Supply Chain Management: The CPIM Reference, Second Edition, page 462, section 13.3.
NEW QUESTION # 46
Which of the following actions will result In lower inventory levels?
- A. Increase customer service level.
- B. Reduce replenishment lead times.
- C. Level load the master production schedule (MPS).
- D. Decentralize inventory locations.
Answer: B
Explanation:
Reducing replenishment lead times will result in lower inventory levels because it means that the time between placing an order and receiving the goods is shorter. This reduces the need to hold excess inventory to cover the uncertainty and variability of demand and supply. Reducing replenishment lead times can also improve customer service levels, as orders can be fulfilled faster and more reliably. Level loading the master production schedule (MPS), increasing customer service level, and decentralizing inventory locations are all actions that will increase inventory levels, as they require more inventory to buffer against fluctuations in demand and supply, and to ensure availability at multiple locations. References: Inventory Management: Lead Time Reduction, APICS CPIM 8 Planning and Inventory Management | ASCM
NEW QUESTION # 47
A company selling seasonal products is preparing their sales and operations plan for the coming year. Their current labor staffing is at the maximum for their production facility and cannot meet the forecasted demand.
The business plan shows they do not have the financial capability to add to the production facility. Which of the following actions would be most appropriate?
- A. Uselevel production planning and investigate subcontracting to meet the extra demand.
- B. Usechaseproduction planningand only take the orders that can be produced In the highdemand season.
- C. Usehybridproduction planningand reduce the size of the customer base during the highdemand season.
- D. Usehybridproduction planningto save labor costs and inventory costs in the low demand season.
Answer: A
Explanation:
Level production planning is a strategy that maintains a constant output rate, production rate, or workforce level over the planning horizon. It is suitable for products with stable demand or seasonal demand that can be smoothed by using inventory or backorders. Level production planning can help reduce labor costs, hiring and firing costs, and overtime costs. However, it may also result in high inventory costs or customer dissatisfaction due to long lead times or stockouts. To overcome these drawbacks, the company can investigate subcontracting to meet the extra demand during the peak season. Subcontracting is the process of outsourcing some or all of the production to another firm. It can help the company increase its capacity, flexibility, and responsiveness without investing in additional facilities or equipment. Subcontracting can also reduce the risk of obsolescence or spoilage of seasonal products.
Option B is not appropriate, because chase production planning is a strategy that adjusts the production rate to match the demand rate over the planning horizon. It is suitable for products with highly variable or uncertain demand that cannot be smoothed by using inventory or backorders. Chase production planning can help minimize inventory costs and avoid overproduction or underproduction. However, it may also result in high labor costs, hiring and firing costs, and overtime costs. Moreover, it may limit the company's ability to capture the market share and satisfy the customer demand during the high demand season.
Option C is not appropriate, because hybrid production planning is a strategy that combines the features of level production planning and chase production planning. It is suitable for products with moderate variability or uncertainty in demand that can be partially smoothed by using inventory or backorders. Hybrid production planning can help balance the trade-offs between inventory costs and labor costs. However, it may also increase the complexity and difficulty of coordinating the production and demand plans. Moreover, it may not address the company's financial constraints or capacity limitations.
Option D is not appropriate, because reducing the size of the customer base during the high demand season is a risky and counterproductive move. It may result in losing loyal customers, damaging the company's reputation, and forfeiting potential profits. It may also create an opportunity for competitors to gain market share and customer loyalty.
References:
*Sales and Operations Planning: An Overview
*Sales and Operations Planning: Strategies and Techniques
*Sales and Operations Planning: Best Practices
NEW QUESTION # 48
A company has a demand for 30 units of A, 40 units of B, and 50 units of C. These products are scheduled to run daily in batches of 10 as follows: ABC, ABC, ABC, CBC. What is this scheduling technique called?
- A. Mixed-model
- B. Matrix
- C. Synchronized
- D. Line balancing
Answer: A
Explanation:
Mixed-model scheduling is a technique that allows multiple products to be produced on the same assembly line without changeovers, and then sequences those products in a way that smoothes the demand for upstream components12. In this case, the company is using mixed-model scheduling to produce three different products (A, B, and C) on the same line, and then alternating them in a pattern that minimizes the variation in the workload and the inventory levels. The other options are not correct because:
*Matrix scheduling is a technique that assigns tasks to workers based on their skills and availability3.
*Synchronized scheduling is a technique that coordinates the production and delivery of materials and components to match the demand of the final assembly4.
*Line balancing is a technique that distributes the workload evenly among the workers or machines on a production line5. References := 1 Create Mixed Model Flow in 5 Steps | Industrial Equipment News 2 Mixed Model Scheduling - Mountain Home Academy 3 Matrix Scheduling - an overview | ScienceDirect Topics 4 Synchronized Scheduling - an overview | ScienceDirect Topics 5 Line Balancing - an overview | ScienceDirect Topics
NEW QUESTION # 49
Price negotiation is most appropriate when purchasing which of the following product categories?
- A. Items of small value
- B. Standard products
- C. Made-to-order (MTO) items
- D. Commodities
Answer: D
Explanation:
Price negotiation is most appropriate when purchasing commodities. Commodities are products or materials that are standardized, widely available, and have low differentiation. Examples of commodities include metals, grains, oil, gas, etc. Price negotiation is a process of bargaining with the supplier to obtain the best possible price for the purchase. Price negotiation is suitable for commodities because they have high price volatility, meaning that their prices fluctuate frequently and unpredictably due to changes in supply and demand, market conditions, and other factors. Price negotiation can help the buyer to take advantage of the price fluctuations and secure a lower price or a better contract term with the supplier. Price negotiation can also help the buyer to reduce the total cost of ownership, which includes not only the purchase price but also the costs of transportation, storage, quality, and risk12. References: 1 How to negotiate price: negotiation tips for salespeople 3 2 CPIM Exam References - Association for Supply Chain Management 1
NEW QUESTION # 50
Which of the following statements about demonstrated capacity Is true?
- A. It reflects the future load.
- B. It considers utilization and efficiency factors.
- C. It is determined from actual results.
- D. It should be higher than rated capacity.
Answer: C
Explanation:
Demonstrated capacity is the actual output achieved by a resource or a system over a period of time, such as a day, a week, or a month. It is determined from actual results, such as production records, time studies, or historical data. Demonstrated capacity reflects the past performance, not the future load, of a resource or a system. It may be lower or higher than the rated capacity, which is the theoretical or design capacity of a resource or a system. Demonstrated capacity considers utilization and efficiency factors, such as machine availability, operator skills, product mix, quality issues, or maintenance schedules, that affect the actual output. References:
Managing Supply Chain Operations, Chapter 5: Capacity Planning and Management, Section 5.2:
Capacity Planning Decisions, page 132-133.
Manufacturing Planning and Control for Supply Chain Management: The CPIM Reference, Second Edition, Chapter 6: Capacity Management, Section 6.2: Capacity Planning, page 156-157.
CPIM 8.0 Exam Content Manual Preview, Module 5: Plan and Manage Supply, Section 5.1: Plan and Manage Capacity, page 9.
NEW QUESTION # 51
Which of the following statements characterizes a pull system In distribution management?
- A. It uses uniform performance measures.
- B. Each warehouse makes its own replenishment decisions.
- C. It uses distribution requirements planning(DRP).
- D. It uses fair-share allocation.
Answer: B
Explanation:
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 times12. References: Push vs. Pull Inventory Management Systems 2023 | Business.org, Push vs. pull: Inventory management for distribution businesses
NEW QUESTION # 52
The master schedule is an Important tool in the sales and operations planning (S&OP) process because it:
- A. represents the forecast with less detail.
- B. balances supply and demand at the product mix level.
- C. represents the forecast before changes are made in S&OP.
- D. balances supply and demand at the sales volume level.
Answer: B
Explanation:
The master schedule is an important tool in the sales and operations planning (S&OP) 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 S&OP 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 S&OP, as the forecast is an input to the S&OP 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. References: Master Schedule | APICS Dictionary Term of the Day, APICS CPIM 8 Planning and Inventory Management | ASCM
NEW QUESTION # 53
When the discrete available-to-promise (ATP) method is used, the master production receipt quantity is committed to:
- A. requests only for shipment in the period of the receipt.
- B. requests only for shipment before the next master production schedule (MPS) receipt.
- C. any request for shipment prior to the demand time fence (DTF).
- D. any request for shipment prior to the planning time fence.
Answer: B
Explanation:
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 receipt12.
References:
*1: APICS CPIM Part 2 Exam Content Manual, Version 8.0, p. 29
*2: NetSuite Applications Suite - Available to Promise Methods3
NEW QUESTION # 54
A company that uses concurrent engineering is likely to experience which of the following outcomes in the first period of a product's life cycle?
- A. An increase in obsolete inventory
- B. Fewer product design changes
- C. Conflicts between purchasing and engineering
- D. More accurate forecasting
Answer: B
Explanation:
Concurrent engineering is a method of designing and developing products in which the different stages run simultaneously, rather than consecutively. It decreases product development time and also the number of errors and rework. By involving all the relevant stakeholders, such as engineering, manufacturing, marketing, and purchasing, in the design process from the beginning, concurrent engineering reduces the need for product design changes later in the product life cycle. References:
*APICS CPIM Part 2 Exam Content Manual, p. 15
*[APICS CPIM Learning System Version 8.0], Module 2, Section B, p. 2-17
NEW QUESTION # 55
In pyramid forecasting, the "roll up" process begins with:
- A. allocating product family forecast changes to individual products.
- B. allocating total business forecast changes to product families.
- C. combining individual product item forecasts into forecasts for product families.
- D. combining forecasts for product families into a total business forecast.
Answer: C
Explanation:
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 error123 References: 1: Pyramid Forecasting Process 2: Rolling Forecast Model | FP&A Tutorial + Excel Template 3: ROLL-UP FORECASTS
NEW QUESTION # 56
If all other factors remain the same, when finished goods inventory investment is increased, service levels typically will:
- A. increase at a decreasing rate.
- B. increase at an increasing rate.
- C. remain the same.
- D. increase in direct (linear) proportion.
Answer: A
Explanation:
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. References: CPIM Part 2 Exam Content Manual, Version 8.0, Section A: Demand Management, Subsection A.3: Demand Management and Customer Service, p. 10.
NEW QUESTION # 57
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