APIC's CPIM Part 1 Practice Exam Questions & Answers

The ability of a company to address the needs of and inquiries and requests from customers refers to: on-time delivery. customer service. order fill rates. customer relationship management. - Answer customer service.: Customer service is the ability of a company to address the needs of and inquiries and requests from customers. Which of the following is included in the cost of goods sold? Standard cost General and administrative expenses Revenue Overhead - Answer Overhead: The cost of goods is classically defined as consisting of direct labor, direct material, and overhead. Which of the following warehouse activities involves bringing goods together and checking for omissions or errors in the order? Dispatching the shipment Picking goods Dispatching goods to storage Marshalling the shipment - Answer Marshalling the shipment: When marshalling a shipment, goods making up a single order are brought together and checked for omissions or errors, and order records are updated accordingly. Picking is the process of selecting items from storage and bringing them to a marshalling area. Dispatching goods to storage is the process of sorting goods upon receipt and placing them in a storage area. Dispatching the shipment is the process of order packing, preparing shipping documents, and loading items on the correct transport vehicles. When purchasing natural products like fruit, what should the supplier agreement specify? Allowable variation in quantity. Exact delivery dates. Discounts if paying late. Exact quantity per order. - Answer Allowable variation in quantity.: Specifying allowable variation in quantity for natural products is an example of the specificity needed in supplier agreements so as to avoid later confusion or disagreement. However, specifying exact delivery dates on products that depend on the weather may also not be possible. A company is experiencing a change in demand from steady to sporadic. It currently uses economic order quantity (EOQ) to determine purchase quantities for a key component. Which of the following models should it use in the future? Lean one-piece flow Period order quantity Fixed order quantity EOQ - Answer Period order quantity: As a product moves from continuous to intermittent demand, a better inventory replenishment tool is a period order quantity, where inventory balances are reviewed periodically and quantity purchased up to a specific maximum quantity. In contrast, EOQ, lean one-piece flow, and fixed order quantity are all based on continuous demand characteristics. Based on the information below, in what week would a planned order release be generated to satisfy the net requirement? Lead time: 3 weeks Order quantity: 100 Net requirement exists in: week 6 Net requirement quantity: 150 Week 1 Week 2 Week 3 Week 6 - Answer Week 3: Because the net requirement exists in week 6, the planned order release is offset by the lead time of three weeks. Thus, the planned order release will be generated in week 6 - 3 weeks = week 3. In a planning bill for an updated configuration of a cellphone, the total percentages for the amounts required for the three possible memory chips used equal 115. What does this indicate? The manufacturer has received more orders for blue than other colors. The manufacturer is making a hedge against higher demand. There has been an error in the calculations. The manufacturer is making up for missed orders. - Answer The manufacturer is making a hedge against higher demand.: When a planning bill's percentage is higher than 100, it is a form of hedge against volatility in demand. It serves roughly the same purpose as safety stock. Because this is a planning bill, no orders have yet been received, and therefore it does not refer to received orders. Which of the following primarily focuses on ensuring that inventory records accurately represent the value of inventory? Audit Periodic inventory Cycle counting Perpetual inventory - Answer Periodic inventory: The main purpose of periodic inventory is to satisfy financial auditors that the inventory records represent the value of the inventory. A company adheres to a policy of level production for its product. What production rate will result in zero ending inventory after four periods? beginning inventory = 0 Period 1 Demand 60 Period 2 Demand 80 Period 3 Demand 40 Period 4 Demand 100 60 70 90 100 - Answer 70: Total Demand for Four Periods = 60 + 80 + 40 + 100 = 280/4 Periods = 70 Units During which step of the purchasing cycle does an organization authorize the purchasing department to purchase specified materials in specified quantities within a specified time? Issue purchase order. Generate requisition. Follow up. Approve payment. - Answer Generate requisition.: The first step of the purchasing cycle, generate requisition, is when an organization authorizes the purchasing department to purchase a set amount of material during a set amount of time. The function of priority planning in a manufacturing company is to determine what material is needed and: the capacity required. when it is needed. where it is needed. potential sources for it. - Answer when it is needed.: Priority planning is, by definition, the function of determining what material is needed and when. The other options deal with either producing the product based on the priority plan or getting and delivering the material identified by priority planning. Which of the following programs asks businesses to embrace, support, and enact, within their sphere of influence, a set of core values in the areas of human rights, labor standards, the environment, and anti-corruption? United Nations Children's Fund United Nations Global Compact ADB/OECD Anti-Corruption Initiative Universal Declaration of Human Rights - Answer United Nations Global Compact: The incorrect answers all represent global initiatives to increase human rights and well-being, but they do not have the focus of the United Nations Global Compact on supply chain management. Drum-buffer-rope (DBR) is the term for: scheduling and managing operations that have an internal constraint or a capacity-constrained resource. balancing the assignment of tasks to workstations to minimize the number of workstations and the amount of idle time at all stations for a given output. spreading orders out in time or rescheduling operations so that the amount of work to be done in sequential time periods tends to be distributed evenly and is achievable. periodically changing employee job responsibilities to provide a broader perspective and view of the organization. - Answer scheduling and managing operations that have an internal constraint or a capacity-constrained resource.: DBR is the theory of constraints method for scheduling and managing operations that have an internal constraint or a capacity-constrained resource. What is the term for an array of inventory broken out into different categories based on Pareto's law? Group technology ABC classification Days of supply Value analysis - Answer ABC classification: An ABC classification of inventory represents a group of items in decreasing order of annual monetary volume (price multiplied by projected volume) or other criteria. This array is then split into three classes: A, B, and C. Which of the following is a means of replenishing inventory through a supplier's review and responsibility to maintain targeted inventory levels? Collaborative planning, forecasting, and replenishment Two-bin system Kanban Vendor-managed inventory - Answer Vendor-managed inventory: Vendor-managed inventory (VMI) is a means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. The available capacity that exists on nonconstraint resources beyond the capacity required to support the constraint is: finite capacity. productive capacity. idle capacity. capacity management. - Answer idle capacity.: In the theory of constraints, activation of any nonconstraint resource beyond what is necessary to support the constraint only produces unwanted and unnecessary inventory. It is better from a cost and throughput perspective to leave the resource idle. In a market where customers accept a standardized product offering, which of the following situations is characteristic of the production environment? The master schedule typically is stated for the finished product level. Work centers are dedicated to producing a wide range of different products. Supplier partnering likely will be on a pull system. Work in process (WIP) represents the largest cost of inventory. - Answer The master schedule typically is stated for the finished product level.: Because products are standardized with no modification, planning at the master schedule level is performed for the finished good. Finished goods inventories, not WIP, represent the largest cost of inventory. Work centers used for make-to-stock products are dedicated to producing a limited range of similar products. Production planning and scheduling in an MTS environment uses an MRP push system where, in turn, demand from suppliers is also based on the MRP push. Which technology would be best used to automatically update machinery use in order to better plan maintenance routines before breakdowns can occur? Artificial intelligence Blockchain Robotic process automation Internet of Things - Answer Internet of Things: The Internet of Things enables equipment and other devices to update their status and location, which can be helpful for automatically tracking machine use and status in order to plan and execute maintenance routines. Which of the following considerations is primary when contracting with a supplier in a lean environment? Order cost Product quality Quantity discounts Transportation costs - Answer Product quality: In a lean environment, it is expected above all else that materials and components will be delivered with perfect quality and will be ready for the production floor without further quality testing. The other answers may be considerations, but they are not primary considerations, especially in a lean environment. A dispute arises over damage to goods shipped between two entities in different countries. Which international standards, if applied at the time of the shipment, would clearly resolve the dispute? UN Global Compact Omnibus Foreign Trade and Competitiveness Act Export Trading Company Act Incoterms - Answer Incoterms: When goods are moved between two entities, it is imperative that clarity exists as to who is responsible for what. Incoterms, developed by the International Chamber of Commerce, are specifically designed to address this need. Based on the following demand history, what is the moving three-month forecast for August? April: 67 units May: 63 units June: 80 units July: 70 units 70 71 75 93 - Answer 71: The calculation is as follows: 63 + 80 + 70 = 213/3 = 71 units. Although data was given for April, the question asks for a three-month forecast for August, so this data is not used. Which of the following benefits of setup reduction is most immediate? Reduced work in process Reduced queue time Reduced product cost Improved quality - Answer Reduced product cost: The time to set up a product has a direct cost that is a component of the overall cost of producing the item. When the setup time is reduced, not only is the cost of setup reduced; the lot size can also be reduced, along with queue and lead times. This will immediately decrease the overall cost of the product. The other answers will occur over time, but not immediately, as a result of setup time reduction. Using ABC classification for cycle counting, A items are counted every week, B items are counted quarterly, and C items are counted annually. There are 2,000 A items, 5,000 B items, and 20,000 C items. How many items are counted each day in total if there are 50 working weeks in the year translating to 250 workdays in the year? 404 units 574 units 560 units 395 units - Answer 560 units: To determine the total number of items to count, multiply the number of items by the number of times the item is counted for each class and then sum the results. A items are counted weekly, so this is 50 times per year: 2,000 units × 50 weeks = 100,000 counts. B items are counted quarterly, so this is 4 times per year: 5,000 × 4 = 20,000 counts. C items are counted once, so this is just 20,000 counts. Next, sum the counts: 100,000 counts + 20,000 counts + 20,000 counts = 140,000 counts. Then divide this sum by the number of manufacturing calendar days in the year: 140,000 counts/250 days = 560 counts per day. Strong customer relations will be best developed by which of the following actions? Implementation of statistical process control (SPC) Use of assemble-to-order to reduce delivery lead time Addition to a mailing list of the firm's new product offerings Partnering in the development and design of requirements - Answer Partnering in the development and design of requirements: An important way to ensure that products and services match customer requirements is to involve customers in the development and design of products. Assemble-to-order actually increases lead times to the customer. Addition to a mailing list of the firm's new product offerings does little to build strong customer relations. The role of SPC (a fundamental tool of quality management) is to ensure that products are being built that match customer specifications and expectations. Which of the following time periods will result in a smoother forecast that is less swayed by random variability when using the moving average forecast technique? 2 months 3 months 6 months 12 months - Answer 12 months: Using more periods—in this case, 12—will smooth out random variation more. The potential downside is that the smoother forecast will make current trends harder to see. Which of the following best defines reverse logistics? Complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling Function of planning, scheduling, and controlling activities related to mode, vendor, and movement of inventories into and out of an organization Distribution network that deals with change of ownership of goods and services, including the activities of negotiation, selling, and contracting Items returned to the manufacturer as defective, obsolete, overages, etc. - Answer Complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling: Reverse logistics is a complete supply chain dedicated to the reverse flow of products and materials for the purpose of returns, repair, remanufacture, and/or recycling.