APICS CPIM Part 1 Terms Questions With Correct Answers

economic order quantity formula - Answer Annual Carrying Cost=Annual Ordering Cost (order quantity/2) x cost per unit x carrying cost percentage=Annual Demand/Lot-Size Quantity x Cost per Order EOQ=Square Root (2AS/Ci)=Square Root of [(2 x Annual Demand x Cost per Order)/{Cost per Unit x Carrying Cost %)] 5 S's of Lean - Answer sort, set in order, shine, standardize, and sustain Hoshin planning - Answer Japanese strategic planning process in which a company develops up to four vision statements that indicate where the company should be in the next five years Quality at the source - Answer The philosophy of making each worker responsible for the quality of his or her work Hansei - Answer self-reflection Takt time - Answer the rate of production needed to meet customer demand yet avoid overproduction Process flexibility - Answer the design of a manufacturing system, including operators and machinery, that allows quick changeovers to respond to near-term changes in product volume and mix Jidoka - Answer when a problem occurs on a production line, a worker is able to stop the process and prevent defective goods from being produced Andon - Answer an electronic board that provides visibility of floor status and supplies information to help coordinate the efforts of linked work centers lean manufacturing - Answer Systematic elimination of waste. Entire system must participate to produce effectively Supplier Partnerships - Answer Partnerships of suppliers and purchasers that remove waste and drive down costs for mutual benefits. In addition to getting a greater share of the business and getting longer-term contracts, suppliers may get an improved ability to plan, improved technological skill sets, and improved competitiveness Total Productive Maintenance (TPM) - Answer Machine operators take responsibility for most of the routine maintenance on their equipment, thus receiving a motivating sense of ownership. Meanwhile, skilled mechanics will still perform more involved maintenance or repair as needed; machine operators are trained to ensure that their machines are ready; and reporting maintenance productivity to management is not related to total productive maintenance. Continuous Process Improvement - Answer a never-ending effort to expose and eliminate the root causes of problems, focusing on small-step improvement as opposed to big-step improvement Kaizen - Answer Japanese term for continuous improvement pull - Answer a system for replenishing field warehouse inventories where replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant Forecasting Principles - Answer 1. Forecasts are usually wrong. Expect errors 2. Every forecast should contain an estimate of error 3. Forecasts are more accurate for product families or groups 4. Forecasts are more accurate for nearer time periods Data collection and preparation principles - Answer 1. The data should be collected in the format in which they will be used in forecasting 2. Record any circumstances or events related to the data 3. Separate demand by customer segment 4. If seasonality exists, it must be removed prior to forecasting and then added back in prior to interpreting the results Deseasonalize - Answer To remove the seasonal effect from past data seasonal index - Answer Period Average Demand/ Average Demand for All periods Deseasonalized Demand - Answer period avg demand/seasonal index Extrinsic forecasting method - Answer A forecast method using a correlated leading indicator; for example, estimating furniture sales based on housing starts. intrinsic forecasting method - Answer A forecast based on internal factors, such as an average of past sales moving average forecast - Answer Sum of Demand for Most Recent Set of Periods/# of Periods Demand Planning - Answer the process of combining statistical forecasting techniques and judgment to construct demand estimates for products or services across the supply chain from the supplier's raw materials to the consumer's needs Demand Management - Answer the function of recognizing all demands for goods and services to support the marketplace Customer Relationship Management (CRM) - Answer a marketing philosophy based on putting the customer first. It involves the collection and analysis of information designed for sales and marketing decision support to understand and support existing and potential customer needs. Exponential Smoothing - Answer a moving average approach that applies exponentially decreasing weights to each demand that occurred farther back in time Demand Planning - Answer the combined process of forecasting and managing customer demands to create a planned pattern of demand that meets the firm's operational and financial goals ATP for Periods containing MPS - Answer =Scheduled MPS Receipt-Sum of Customer Orders Before Next Period Containing MPS Receipt Which manufacturer would be most likely to use a chase strategy? A. Seasonal glassware manufacturer. B. Seasonal ice cream candy bar manufacturer. C. Paint manufacturer. D. Compression socks manufacturer. - Answer The seasonal ice cream candy bar manufacturer sells perishable products that also have distinct seasonality. Because perishable products cannot be produced long in advance of need, they cannot use a level strategy and may need to use a chase strategy. capable-to-promise (CTP) - Answer The process of committing orders against available capacity as well as inventory. load leveling - Answer 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 The sales and operations planning process - Answer Must reconcile all supply, demand, and new product plans at both the detail and aggregate levels and tie to the business plan. S&OP improves inventory planning by reviewing and adjusting aggregate inventory levels toward their targeted level at least monthly rough-cut capacity planning - Answer is compared to available or demonstrated capacity and is usually done for each key resource. An estimation of the availability of the critical resources needed to support the MPS. The process of converting the master production schedule into requirements for key resources, often including labor, machinery, warehouse space, suppliers' capabilities, and in some cases money. Master Schedule - Answer includes time periods (dates), the forecast, customer orders, projected available balance, available-to-promise, and the master production schedule The information needed to develop a master schedule will come from which source? Capacity requirements plan Material requirements plan Production activity control Forecast of individual end items - Answer The capacity requirements plan, production activity control, and material requirements plan relate to capacity planning, execution, and priority planning activities that follow the master scheduling process. Therefore, to develop a master schedule, you will need the forecast of individual end items. Planning Bill of Material - Answer An artificial grouping of items or events in bill-of-material format used to facilitate master scheduling and material planning. Routing - Answer the process of deciding which path to take on a network. This is determined by the type of network and the software used to transmit data. Item Master - Answer the database repository where information about an item is kept pick list - Answer a list of stock items to be picked to fill an order material requirements planning - Answer A dependent demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements. risk management - Answer using strategies to reduce the amount of risk (the degree of likelihood that a person will become ill upon exposure to a toxin or pathogen). Which observation is true as priority planning moves through the various levels of capacity validation and becomes more and more detailed? A. Master scheduling plans all resource capacities at the end-item level. B. Material requirements planning plans detailed resource requirements just for component-level bottlenecks. C. The duration of the planning horizon gets longer to accommodate the increase in detail. D. Sales and operations planning plans just critical resources at the product family level. - Answer Sales and operations planning plans just critical resources at the product family level. The purpose of CRP - Answer show any imbalances between capacity and load by work center. Available capacity is calculated outside of CRP but is used as an input. load profile - Answer a graphic comparison of each work center's available capacity and the load established by the planned and released orders for each time period of the plan work center profile - Answer shows the available work center capacity but not the capacity required Capacity requirements planning (CRP) receives the preliminary requirements plan in the form of which of the following? Routing Planned and open orders Design specifications Bills of material - Answer Planned and open orders The purpose of CRP - Answer to show any imbalances between capacity and load by work center load profile - Answer A display of future capacity requirements based on released and/or planned orders over a given span of time. S&OP plans critical resources at the product family level Master Scheduling plans key resources and bottlenecks at the end-item level MRP plans detailed resource requirements at the component level. - Answer Physical supply - Answer The movement and storage of goods from suppliers to manufacturing. The cost of physical supply is ultimately passed on to the customer. Landed cost - Answer This cost includes the product cost plus the costs of logistics, such as warehousing, transportation, and handling fees. Total cost of ownership (TCO) - Answer In supply chain management, the total cost of ownership of the supply delivery system is the sum of all the costs associated with every activity of the supply stream. The main insight that TCO offers to the supply chain manager is the understanding that the acquisition cost is often a very small portion of the total cost of ownership. dock-to-stock - Answer A program by which specific quality and packaging requirements are met before the product is released. Prequalified product is shipped directly into the customer's inventory. Dock-to-stock eliminates the costly handling of components, specifically in receiving and inspection and enables product to move directly into production. supplier relationship management (SRM) - Answer A comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services the enterprise uses. The goal of SRM is to streamline and make more effective the processes between an enterprise and its suppliers. SRM is often associated with automating procure-to-pay business processes, evaluating supplier performance, and exchanging information with suppliers. An e-procurement system is often an example of an SRM family of applications. Sole-source supplier - Answer The only supplier capable of meeting (usually technical) requirements for an item. Single-source supplier - Answer A company that is selected to have 100 percent of the business for a part although alternate suppliers are available. Multisourcing - Answer Procurement of a good or service from more than one independent supplier. request for quote (RFQ) - Answer A document used to solicit quotes or bids from prospective suppliers vendor-managed inventory (VMI) - Answer an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer's inventory levels in each of its stores consignment - Answer the process of a supplier placing goods at a customer location without receiving payment until after the goods are used or sold. continuous replenishment - Answer A system that involves continuously monitoring merchandise sales and generating replacement orders, often automatically, when inventory levels drop below predetermined levels. supplier scheduling - Answer A purchasing approach that provides suppliers with schedules rather than with individual hard-copy purchase orders. Normally, a supplier scheduling system will include a business agreement (contract) for each supplier, a weekly ( or more frequent) schedule for each supplier extending for some time into the future, and individuals called supplier schedules. Also required is a formal priority planning system that works well, because it is essential in this arrangement to provide the supplier with valid due dates. backflushing - Answer Exploding an end item's BOM to determine the quantities of the components that were used to make the item buffer replenishment - Answer A minimum inventory level is specified as a reorder point. When the inventory reaches that level, a fixed amount is automatically reordered using contract ordering or a requisition is generated to begin the purchasing cycle purchase requisition - Answer An authorization to the purchasing department to purchase specified materials in specified quantities within a specified time. purchase order - Answer a written order by a buyer for merchandise or other property specified in the purchase requisition reverse auction - Answer An internet auction in which suppliers attempt to underbid their competitors. Company identities are known only by the buyer. Which of the following should be done as part of the last step in the purchasing cycle for materials to be used in a traditional manufacturing process to reduce the risk of paying for incorrect materials or quantities? Compare the name, part number, quantity, description, and price of goods ordered versus delivered. Do a three-way match between purchase order, receiving report, and invoice. Do a three-way match between the purchase order, the purchase requisition, and the MRP (materials requirements planning) released order. Compare the incoming order with the status of the order to determine if there are discrepancies. - Answer Do a three-way match between purchase order, receiving report, and invoice. purchasing cycle stages - Answer 1. Receiving purchase requisition 2. Selecting suppliers 3. Determining the right price 4. Issuing purchase orders 5. Ensuring that delivery dates are met 6. Receiving goods and closing the order 7. Approving suppliers' invoice for payment Sourcing - Answer the process of identifying a company that provides a needed good or service Approving a supplier's invoice for payment is preceded by the three-way match process of reconciling the purchase order, the receiving report, and the invoice. - Answer load profile - Answer A display of future capacity requirements based on released and/or planned orders over a given span of time. on-time schedule performance - Answer Measure (%) of meeting the customer's originally negotiated delivery request date; performance can be expressed as % of # of orders, line items, or $ value shipped