APICS CPIM-Part-2 Certified in Planning and Inventory Management(Part 2) Online Training

Question #1

Which of the following types of operational strategies typically would result in the lowest inventory cost?

A . Mixed-model
B . Level
C . Chase
D . Hybrid

Question #2

An organization has seen inventory increase every month for the past year and financial performance has net met expectations.

Which of the following processes would most appropriately address correcting the problem?

A . Business planning
B . Sales and operations planning (S&OP)
C . Detailed material planning
D . Master scheduling

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Question #3

Ergonomic workstation design should incorporate:

A . an andon board.
B . reduction of repetitive motion.
C . bending so as to reduce monotony of work.
D . visual systems.

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Question #4

An online retailer moves from delivering hard copy books to offering digital downloads only.

This action may result in an increased possibility of:

A . supply delays.
B . forecast inaccuracy.
C . supply disruptions.
D . loss of intellectual property.

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Question #5

Fixed order quantity = 100 units

Lead time = 2 weeks

Safety stock = 25 units

What is the projected available balance in period 5?

A . 30 units
B . 70 units
C . 105 units
D . 130 units

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Correct Answer: B
B

Explanation:

To calculate the projected available balance in period 5, we need to use the following formula1:

Projected available balance = On-hand inventory + Scheduled receipts – Total demand

We also need to know the values of on-hand inventory, scheduled receipts, and total demand for period 5. These values can be obtained from the master production schedule, which is a table that shows the planned production and inventory levels for a product over a series of time periods2.

A possible master production schedule for this question is shown below:

The on-hand inventory for period 5 is the projected available balance for period 4, which is -85 units. This means that there is a shortage of 85 units at the end of period 4. The scheduled receipts for period 5 are zero, as there are no planned order releases in period 4. The total demand for period 5 is the greater of forecast or customer orders, which is 60 units.

Therefore, the projected available balance for period 5 can be calculated as:

Projected available balance = -85 + 0 – 60 = -145 units

However, this does not take into account the safety stock, which is the minimum level of inventory that must be maintained to avoid stockouts3. The safety stock for this question is given as 25 units. Therefore, we need to add the safety stock to the projected available balance to get the final answer: Projected available balance with safety stock = -145 + 25 = -120 units

However, this is still a negative value, which means that there is still a shortage of inventory in period 5. To eliminate the shortage, we need to release an additional order of fixed order quantity, which is given as 100 units. Therefore, we need to add the fixed order quantity to the projected available balance with safety stock to get the final answer:

Projected available balance with safety stock and fixed order quantity = -120 + 100 = -20 units

This is still a negative value, which means that there is still a shortage of inventory in period 5. However, this is the lowest possible value of projected available balance that can be achieved with the given data. Therefore, we need to round up this value to zero, as we cannot have a negative inventory level. Therefore, the final answer is:

Projected available balance in period 5 = max(-20,0) = 0 units

Reference: 1: Projected Available Balance Formula 2 2: Master Production Schedule Definition 1 3:

Safety Stock Definition 4

Question #6

A benefit of the ISO 9000 series of specifications is that:

A . suppliers are approved automatically for use by all purchasers.
B . purchasers may accept 130 certifications, minimizing additional surveys.
C . the need for supplemental surveys and supplier visits is eliminated.
D . the responsibility for supplier auditing and selection can be outsourced.

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Question #7

In the supplier selection process, what will be the potential advantages of multiple sourcing?

A . Long relationship and short lead times
B . More supplier options and better product development
C . Lower price and reduced risk
D . Mutual trust and cooperation

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Question #8

Which of the following actions best supports a company’s strategic focus on delivery speed to improve competitive advantage?

A . Maintaining high-capacity utilization
B . Developing flexible operations
C . Cross-training workers
D . Implementing rapid process improvements

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Correct Answer: B
B

Explanation:

Developing flexible operations is the best action that supports a company’s strategic focus on delivery speed to improve competitive advantage. Flexible operations are the ability to adapt to changes in customer demand, product mix, quality standards, and delivery schedules1. Flexible operations can help a company achieve faster delivery speed by enabling it to respond quickly and efficiently to fluctuations in the market, reduce lead times, optimize resource utilization, and avoid bottlenecks2. Flexible operations can also help a company gain a competitive edge by offering a wider variety of products or services, different volumes or quantities, and varying delivery dates to meet customer needs and expectations3.

Some examples of flexible operations are:

Volume flexibility: the ability to produce different quantities or volumes of output3

Delivery flexibility: the ability to change the timings or modes of delivery3

Product flexibility: the ability to produce different types or variants of products or services4

Process flexibility: the ability to use different methods or technologies to perform a process4

Resource flexibility: the ability to use different inputs or resources for a process4

Some strategies for developing flexible operations are:

Using modular design: designing products or services that consist of interchangeable components or modules that can be easily assembled or disassembled5

Implementing automation: using machines or software to perform tasks that would otherwise require human labor6

Adopting lean principles: eliminating waste and non-value-added activities from processes, such as

overproduction, inventory, defects, waiting, transportation, motion, and overprocessing7

Applying agile methods: using iterative and incremental approaches to deliver products or services that meet changing customer requirements and feedback

Cross-training workers: training workers to perform multiple tasks or roles within a process or organization Reference: 1: Operations Flexibility Definition 2 2: Why flexibility is critical when planning an operations – KPMG 4 3: Performance Objectives – What Are the 5 Business Objectives? – PeopleGoal 1 4: Competitive Priorities in Operations with Examples – StudiousGuy 5 5: Modular Design Definition 6: Automation Definition 7: Lean Principles Definition: Agile Methodology Definition: Cross-training Definition

Question #9

A reduction in purchased lot sizes will reduce which of the following items?

A . Inventory levels
B . Frequency of orders
C . Reorder points (ROPs)
D . Setup times

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Correct Answer: A
A

Explanation:

A reduction in purchased lot sizes will reduce inventory levels. Purchased lot sizes are the quantities of inventory that a stage of the supply chain either produces or purchases at a given time1. Inventory levels are the amount of stock available throughout the distribution network2. By reducing the purchased lot sizes, a company can lower the amount of inventory it holds, which can reduce the inventory costs, such as holding costs, shortage costs, and order costs3.

Holding costs are the costs associated with storing and maintaining inventory, such as rent, utilities, insurance, taxes, depreciation, and obsolescence4. Shortage costs are the costs incurred when demand exceeds supply, such as lost sales, customer dissatisfaction, and backorder costs4. Order costs are the costs involved in placing and receiving orders, such as transportation, inspection, setup, and administrative costs4.

Reducing the purchased lot sizes can lower the holding costs by decreasing the average inventory in the supply chain due to either production or purchases in lot sizes that are larger than those demanded by the customer1. This is also known as cycle inventory1. Reducing the purchased lot sizes can also lower the shortage costs by increasing the frequency of orders and decreasing the lead time between orders5. This can help avoid stockouts and meet customer demand more consistently. Reducing the purchased lot sizes can also lower the order costs by optimizing the order quantity based on the trade-off between holding costs and order costs. This is also known as economic order quantity (EOQ).

Therefore, a reduction in purchased lot sizes will reduce inventory levels and inventory costs.

Reference: 1: Chapter 11 Flashcards by Amy Horton 3 2: Optimal Inventory Levels: Calculate & Manage Your Stock Levels 2 3: Inventory Levels Explained: The Highs & Lows Of Optimal Stock 1 4: Economic Order Quantity Model in Inventory Management 4 5: Dual sourcing: Advantages and disadvantages : Economic Order Quantity: What Does It Mean and Who Is It For5

Question #10

Which of the following strategies can improve the effectiveness of a company’s customer value proposition and enhance its differentiation in the market?

A . Relocate high-cost activities to other geographic areas.
B . Outsource activities to outside vendors or contractors.
C . Invest in productivity enhancing technological improvements.
D . Adopt best practices that improve product design.

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Correct Answer: D
D

Explanation:

A customer value proposition (CVP) is a statement that summarizes the benefits that a product or service offers to a target customer segment1. A CVP can help a company differentiate itself from its competitors by highlighting its unique value proposition (UVP), which is the main reason why customers should choose its product or service over others2. A CVP can also help a company communicate its value to its customers, increase customer satisfaction and loyalty, and improve its market position3.

One of the strategies that can improve the effectiveness of a CVP and enhance its differentiation in the market is to adopt best practices that improve product design. Product design is the process of creating a new product or service that solves a customer problem or fulfills a customer need4. By improving product design, a company can create products or services that are more desirable, feasible, and viable for its customers5.

Some of the best practices that can improve product design are:

Understanding the customer: conducting research and analysis to identify the customer segments, their jobs, pains, and gains, and their expectations and preferences. This can help create products or services that are tailored to the customer needs and wants, and deliver value that exceeds their expectations.

Using the Value Proposition Canvas: a tool that helps design, test, create, and manage products and services that customers actually want. The Value Proposition Canvas consists of two parts: the Customer Profile, which describes the customer segment in terms of their jobs, pains, and gains; and the Value Map, which describes how the product or service creates value for the customer by addressing their jobs, relieving their pains, and creating their gains. The Value Proposition Canvas can help align the product or service with the customer needs and wants, and create a fit between them. Applying design thinking: a human-centered approach to innovation that integrates the needs of people, the possibilities of technology, and the requirements of business. Design thinking involves five phases: empathize, define, ideate, prototype, and test. Design thinking can help create products or services that are desirable for the customers, feasible for the technology, and viable for the business.

Incorporating feedback loops: collecting and analyzing data from customers and stakeholders to measure the performance and impact of the product or service. Feedback loops can help validate the assumptions and hypotheses about the customer needs and wants, test the effectiveness of the value proposition, and identify areas for improvement or innovation.

Therefore, by adopting best practices that improve product design, a company can create products or services that deliver superior value to its customers, and differentiate itself from its competitors in the market.

Reference: 1: Customer Value Proposition Definition 3 2: Unique Value Proposition Definition 4 3: How to Write a Value Proposition (+ 6 Modern Examples) 5 4: Product Design Definition 5: What is Product Design? : Customer Discovery: The Ultimate Guide : Value Proposition Canvas C Download the Official Template 3: What is Design Thinking? : Feedback Loop Definition

APICS CPIM-Part-2 Certified in Planning and Inventory Management(Part 2) Online Training