APICS CPIM Certified in Production and Inventory Management

What is the primary purpose of a supply chain strategy?

• ATo minimize inventory costs across all locations
• BTo align supply chain operations with overall business strategy and competitive priorities
• CTo automate all production processes using robotics
• DTo eliminate all suppliers and bring production in-house

A company competing primarily on responsiveness and fast delivery would most likely adopt which supply chain strategy?

• AEfficiency-focused supply chain with minimum inventory
• BResponsive supply chain with strategic buffer inventory near customers
• CLean supply chain with no safety stock
• DOutsourced supply chain with single global supplier

In Porter's generic competitive strategies, which strategy focuses on offering products or services at the lowest cost in the industry?

• ADifferentiation strategy
• BCost leadership strategy
• CFocus strategy
• DNiche strategy

What is the purpose of a SWOT analysis in strategic planning?

• ATo calculate optimal order quantities for inventory
• BTo identify internal Strengths and Weaknesses and external Opportunities and Threats
• CTo determine the best shipping routes for distribution
• DTo forecast demand using statistical methods

Which KPI would be MOST appropriate for measuring supply chain responsiveness?

• ACash-to-cash cycle time
• BOrder fulfillment cycle time
• CInventory carrying cost percentage
• DAsset turnover ratio

A manufacturing company is evaluating whether to invest in a new automated production line. Which analysis would be MOST appropriate for this decision?

• AABC inventory analysis
• BNet Present Value (NPV) analysis
• CEOQ calculation
• DCritical Path Method (CPM)

What is the primary purpose of Sales and Operations Planning (S&OP)?

• ATo create detailed daily production schedules
• BTo balance demand and supply at the aggregate level and align operational plans with busi…
• CTo manage individual customer orders
• DTo track individual employee productivity

In the S&OP process, what occurs during the "Demand Review" step?

• AManufacturing capacity is assessed and constraints are identified
• BThe unconstrained demand forecast is reviewed and validated by the sales and marketing or…
• CFinancial projections are finalized for the quarter
• DSupplier contracts are negotiated and renewed

What is the key output of the S&OP process?

• AA detailed bill of materials for each product
• BAn agreed-upon demand and supply plan at the product family level
• CIndividual work center schedules for the next shift
• DA complete list of all suppliers and their contact information

During S&OP reconciliation, demand exceeds supply capacity by 15%. Which action would be MOST appropriate to address this gap?

• AImmediately hire 100 new production workers
• BEvaluate options such as overtime, temporary workers, outsourcing, or demand shaping
• CReduce the sales forecast to match current capacity
• DCancel all marketing promotions for the next year

Which statement best describes aggregate planning?

• AIt plans production for individual SKUs on a daily basis
• BIt develops medium-range capacity and production plans for product families
• CIt schedules specific work orders to individual machines
• DIt forecasts demand for the next 5-10 years

What is the primary purpose of demand management?

• ATo increase production capacity to meet any possible demand
• BTo recognize, influence, and manage all demand for products and services
• CTo minimize marketing expenditures
• DTo eliminate all inventory from the supply chain

Which forecasting method would be MOST appropriate for a new product with no historical sales data?

• AMoving average
• BExponential smoothing
• CMarket research and analog forecasting
• DTime series decomposition

A company uses exponential smoothing with alpha = 0.2. The forecast for January was 1,000 units, and actual demand was 1,200 units. What is the February forecast?

• A1,000 units
• B1,040 units
• C1,200 units
• D1,160 units

What does Mean Absolute Percentage Error (MAPE) measure?

• AThe total sales volume over a period
• BThe average percentage difference between forecast and actual demand
• CThe correlation between two forecasting methods
• DThe cost of forecast errors in dollars

A forecast has a bias of +15%. What does this indicate?

• AThe forecast is consistently 15% higher than actual demand
• BThe forecast has 15% random variation
• CThe forecast is 15% more accurate than last year
• DThe forecast requires 15% safety stock

Which of the following is an example of demand shaping?

• AUsing seasonal indices to adjust forecasts
• BOffering promotional pricing to stimulate demand during low periods
• CCalculating safety stock requirements
• DPerforming ABC analysis on inventory

What is the primary purpose of a Master Production Schedule (MPS)?

• ATo calculate raw material requirements for all components
• BTo plan production at the end-item level and drive material requirements planning
• CTo schedule individual workers to specific tasks
• DTo determine annual financial budgets

What is the function of a planning time fence in master scheduling?

• ATo prevent changes to the schedule within a specified period
• BTo calculate shipping costs for deliveries
• CTo track inventory accuracy
• DTo measure supplier performance

Which of the following is an input to Material Requirements Planning (MRP)?

• ACustomer credit ratings
• BMaster Production Schedule, Inventory Records, and Bill of Materials
• CEmployee performance reviews
• DStock market indices

What is the difference between independent demand and dependent demand?

• AIndependent demand is forecasted; dependent demand is calculated
• BIndependent demand comes from external customers; dependent demand is derived from parent…
• CThere is no difference; the terms are interchangeable
• DIndependent demand is for raw materials; dependent demand is for finished goods

What is the purpose of Rough-Cut Capacity Planning (RCCP)?

• ATo schedule individual machine operations
• BTo validate the Master Production Schedule against key resource capacity
• CTo calculate the exact number of workers needed each day
• DTo determine optimal inventory levels for all items

In a make-to-order (MTO) environment, which statement is TRUE?

• AProducts are manufactured to stock based on demand forecasts
• BProduction begins only after a customer order is received
• CStandard products are always available in inventory
• DDemand forecasting is not necessary

What is the primary purpose of supplier relationship management (SRM)?

• ATo find the lowest price for every purchased item
• BTo develop strategic partnerships that create value for both parties
• CTo eliminate all suppliers and produce everything internally
• DTo automate all purchasing transactions

Which sourcing strategy involves using a single supplier for a particular item?

• ADual sourcing
• BSole sourcing
• CMultiple sourcing
• DCross sourcing

A company is evaluating suppliers using criteria including quality, delivery, cost, and technical capability. What is this called?

• ASingle factor analysis
• BTotal cost of ownership or multi-criteria supplier evaluation
• CRandom selection
• DPrice-only bidding

What is the purpose of a purchase order (PO)?

• ATo request payment from customers
• BTo formally communicate requirements and create a legally binding agreement with a suppli…
• CTo schedule production on the factory floor
• DTo forecast future demand

Which of the following BEST describes vendor-managed inventory (VMI)?

• AThe buyer manages all inventory for the supplier
• BThe supplier monitors and replenishes inventory at the buyer's location
• CInventory is owned by a third-party logistics provider
• DAll inventory is eliminated from the supply chain

What is the primary purpose of safety stock?

• ATo maximize inventory investment
• BTo buffer against uncertainty in demand and supply
• CTo eliminate the need for forecasting
• DTo increase warehouse space utilization

The Economic Order Quantity (EOQ) formula balances which two costs?

• APurchasing cost and selling price
• BOrdering cost and carrying cost
• CLabor cost and material cost
• DFixed cost and variable cost

Annual demand is 10,000 units, ordering cost is $100 per order, and carrying cost is $4 per unit per year. What is the EOQ?

• A500 units
• B707 units
• C1,000 units
• D2,500 units

What is the reorder point formula?

• AEOQ divided by annual demand
• BExpected demand during lead time plus safety stock
• CAnnual demand divided by order quantity
• DCarrying cost divided by ordering cost

Which inventory carrying cost component is typically the LARGEST?

• AStorage and handling costs
• BCost of capital (opportunity cost of money tied up in inventory)
• CInsurance costs
• DObsolescence and damage costs

What does ABC inventory classification prioritize?

• AThe physical size of inventory items
• BThe annual dollar usage value of inventory items
• CThe alphabetical order of item names
• DThe geographic location of warehouses

A company wants to reduce its cycle stock by half. Assuming constant demand and EOQ, what must happen to order frequency?

• AOrder frequency must double
• BOrder frequency must remain the same
• COrder frequency must be cut in half
• DOrder frequency is not related to cycle stock