CPIM Formulas questions and answers
with solutions
Days sales outstanding (accounts receivable)
cash-to-cash cycle time - days inventory outstanding + days payable
outstanding (accounts payable)
average ordering cost
To calculate the average ordering cost per order, divide the fixed costs
($900) by the units produced (3,000), which is $0.30. Add the fixed cost
to the variable cost to obtain the average ordering cost per order ($3.00
+ $0.30 = $3.30)
Planned backlog
Previous Planned Backlog + Planned Input - Planned Output
Total cost
Fixed cost + (Variable cost per unit x Number of units produced)
Annual carrying cost
Annual carrying cost = (Order quantity in units ÷ 2) x Unit cost in dollars
x Annual carrying cost rate as a decimal
Annual carrying cost = (210 ÷ 2) x $10 x 0.15
Annual carrying cost = 105 x $10 x 0.15
Annual carrying cost = $1,050 x 0.15
Annual carrying cost = $157.50
Calculate the new total safety stock requirement given the following
information:
,Present number of distribution centers (DCs): 1 DC
Number of distribution centers being added: 3 DCs
Total safety stock now in distribution centers: 4,000 units
Calculate the required safety stock in each location using the formula of
safety stock divided by the square root of the total number of
distribution centers
Annual Inventory Carrying Cost
= Quantity/2 × Carrying Cost Rate × Unit Cost = Q /2 × i × c = 800/2 × 0.2
× $9 = $720.
Economic Order Quantity
= Square Root of [(2 × Annual Demand × Order Cost)/(Carrying Cost Rate
× Item Cost)]
Which of the following terms applies to 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?
Load leveling
3 multiple choice options
Which option would be most likely to result in a realistic and achievable
schedule while also taking advantage of excess capacity?
Finite forward scheduling
3 multiple choice options
When measuring shop floor performance, which method will encourage
not producing unwanted product?
Schedule completion
3 multiple choice options
, What information do item master files provide to production activity
control?
Part number and description
3 multiple choice options
Which of the following benefits of setup reduction is most immediate?
Reduced product cost
3 multiple choice options
In a service environment with a sufficient labor force, what is often still
a labor scheduling constraint when attempting to balance supply and
demand in the short term?
Equipment capacity
3 multiple choice options
Production is about to start manufacturing a new product. In order to
begin, they will need to have specific information and instructions. In
which of the following will this information be contained?
Product's routing
3 multiple choice options
What is a significant advantage of using forward scheduling in a make -
to-order environment?
Forward scheduling determines when orders could be completed.
3 multiple choice options
Which of the following aspects of a job most determines the day and
time when the job will be done?
Sequence
3 multiple choice options
with solutions
Days sales outstanding (accounts receivable)
cash-to-cash cycle time - days inventory outstanding + days payable
outstanding (accounts payable)
average ordering cost
To calculate the average ordering cost per order, divide the fixed costs
($900) by the units produced (3,000), which is $0.30. Add the fixed cost
to the variable cost to obtain the average ordering cost per order ($3.00
+ $0.30 = $3.30)
Planned backlog
Previous Planned Backlog + Planned Input - Planned Output
Total cost
Fixed cost + (Variable cost per unit x Number of units produced)
Annual carrying cost
Annual carrying cost = (Order quantity in units ÷ 2) x Unit cost in dollars
x Annual carrying cost rate as a decimal
Annual carrying cost = (210 ÷ 2) x $10 x 0.15
Annual carrying cost = 105 x $10 x 0.15
Annual carrying cost = $1,050 x 0.15
Annual carrying cost = $157.50
Calculate the new total safety stock requirement given the following
information:
,Present number of distribution centers (DCs): 1 DC
Number of distribution centers being added: 3 DCs
Total safety stock now in distribution centers: 4,000 units
Calculate the required safety stock in each location using the formula of
safety stock divided by the square root of the total number of
distribution centers
Annual Inventory Carrying Cost
= Quantity/2 × Carrying Cost Rate × Unit Cost = Q /2 × i × c = 800/2 × 0.2
× $9 = $720.
Economic Order Quantity
= Square Root of [(2 × Annual Demand × Order Cost)/(Carrying Cost Rate
× Item Cost)]
Which of the following terms applies to 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?
Load leveling
3 multiple choice options
Which option would be most likely to result in a realistic and achievable
schedule while also taking advantage of excess capacity?
Finite forward scheduling
3 multiple choice options
When measuring shop floor performance, which method will encourage
not producing unwanted product?
Schedule completion
3 multiple choice options
, What information do item master files provide to production activity
control?
Part number and description
3 multiple choice options
Which of the following benefits of setup reduction is most immediate?
Reduced product cost
3 multiple choice options
In a service environment with a sufficient labor force, what is often still
a labor scheduling constraint when attempting to balance supply and
demand in the short term?
Equipment capacity
3 multiple choice options
Production is about to start manufacturing a new product. In order to
begin, they will need to have specific information and instructions. In
which of the following will this information be contained?
Product's routing
3 multiple choice options
What is a significant advantage of using forward scheduling in a make -
to-order environment?
Forward scheduling determines when orders could be completed.
3 multiple choice options
Which of the following aspects of a job most determines the day and
time when the job will be done?
Sequence
3 multiple choice options
