CPIM CERTIFIED IN PRODUCTION & INVENTORY MANAGEMENT EXAM
PREP 200 COMPREHENSIVE PRACTICE QUESTIONS WITH VERIFIED
ANSWERS & DETAILED RATIONALES COVERING S&OP, MRP, MPS,
CAPACITY PLANNING, INVENTORY MANAGEMENT, LEAN, TOC,
FORECASTING, SUPPLY CHAIN STRATEGY, AND OPERATIONS PLANNING
FOR APICS CERTIFICATION SUCCESS
Question 1: Which of the following best defines the primary objective
of Sales and Operations Planning (S&OP) in a supply chain context?
A. To create a detailed production schedule for the upcoming week.
B. To balance demand and supply at the aggregate level, aligning
strategic business plans with operational execution.
C. To finalize all purchase orders with suppliers for the next quarter.
D. To determine the exact daily workforce requirements for each
production line.
CORRECT ANSWER: B
Rationale: S&OP is a process that reconciles the strategic business plan
with the operational plans of sales, marketing, and production. It
focuses on aggregate volumes and product families to achieve a
consensus plan that balances demand and supply. Option A is too
granular and is the role of detailed scheduling. Option C is a
procurement function, and Option D is a tactical workforce planning
task, not the aggregate balancing act of S&OP.
,Question 2: Which lot-sizing rule would result in the lowest inventory
holding costs while ensuring no orders are placed for more than what is
immediately required?
A. Economic Order Quantity (EOQ)
B. Lot-for-Lot (L4L)
C. Fixed Order Quantity (FOQ)
D. Period Order Quantity (POQ)
CORRECT ANSWER: B
Rationale: The Lot-for-Lot rule dictates that the order quantity should
exactly match the net requirements for each period. This means
inventory is ordered only as needed, resulting in minimal average
inventory levels and the lowest possible holding costs. While other
options like EOQ balance holding and ordering costs, they often involve
larger order quantities, leading to higher average inventory.
Question 3: A company uses a periodic review system. If the review
interval is 15 days and the lead time is 5 days, what is the time supply
that the order-up-to level must cover?
A. 5 days
B. 15 days
C. 20 days
D. 25 days
CORRECT ANSWER: C
Rationale: In a periodic review system (P-system), the order-up-to level
must cover the demand during the review interval (T) and the lead time
,(L). This is because an order placed at the review point will not arrive
until after the lead time, and during that lead time, demand continues.
Therefore, the time supply is T + L = 15 + 5 = 20 days.
Question 4: What is the primary purpose of a "Time Fence" in the
context of the Master Production Schedule (MPS)?
A. To increase the frequency of MPS updates for improved
responsiveness.
B. To define a period where system and customer-driven changes to the
MPS are strictly controlled or prohibited.
C. To separate the planning horizon for different product families.
D. To automatically trigger purchase orders for raw materials.
CORRECT ANSWER: B
Rationale: Time fences are boundaries set in the MPS that help
maintain stability. Within the "frozen" zone (or near the fence), changes
to the schedule are typically not allowed due to significant costs already
incurred. Further out (in the "slushy" or "liquid" zones), more flexibility
exists. The primary purpose is to prevent disruptions and maintain a
feasible schedule.
Question 5: A company has an annual demand of 10,000 units, an
ordering cost of $50 per order, and a holding cost of $2 per unit per
year. What is the Economic Order Quantity (EOQ)?
A. 500 units
B. 707 units
, C. 1,000 units
D. 2,500 units
CORRECT ANSWER: B
Rationale: The Economic Order Quantity (EOQ) formula is √(2DS/H),
where D is annual demand, S is the ordering cost per order, and H is the
holding cost per unit per year. Plugging the values in: √(2 × 10,000 × 50 /
2) = √(1,000,) = √(500,000) = 707.1 units.
Question 6: In the Theory of Constraints (TOC), what is the primary
focus for improving throughput?
A. Maximizing the efficiency of all machines and resources.
B. Reducing the cost of raw materials.
C. Identifying and managing the system's constraint (bottleneck).
D. Increasing the number of employees on the production floor.
CORRECT ANSWER: C
Rationale: The Theory of Constraints, as developed by Eliyahu Goldratt,
posits that every system has at least one constraint that limits its overall
throughput. The primary focus of improvement efforts must be on
identifying this constraint, exploiting it to its maximum potential, and
then subordinating all other processes to support it. Improving non-
constraint resources does not increase overall throughput.
Question 7: What does the acronym "MAD" stand for in the context of
demand forecasting?
PREP 200 COMPREHENSIVE PRACTICE QUESTIONS WITH VERIFIED
ANSWERS & DETAILED RATIONALES COVERING S&OP, MRP, MPS,
CAPACITY PLANNING, INVENTORY MANAGEMENT, LEAN, TOC,
FORECASTING, SUPPLY CHAIN STRATEGY, AND OPERATIONS PLANNING
FOR APICS CERTIFICATION SUCCESS
Question 1: Which of the following best defines the primary objective
of Sales and Operations Planning (S&OP) in a supply chain context?
A. To create a detailed production schedule for the upcoming week.
B. To balance demand and supply at the aggregate level, aligning
strategic business plans with operational execution.
C. To finalize all purchase orders with suppliers for the next quarter.
D. To determine the exact daily workforce requirements for each
production line.
CORRECT ANSWER: B
Rationale: S&OP is a process that reconciles the strategic business plan
with the operational plans of sales, marketing, and production. It
focuses on aggregate volumes and product families to achieve a
consensus plan that balances demand and supply. Option A is too
granular and is the role of detailed scheduling. Option C is a
procurement function, and Option D is a tactical workforce planning
task, not the aggregate balancing act of S&OP.
,Question 2: Which lot-sizing rule would result in the lowest inventory
holding costs while ensuring no orders are placed for more than what is
immediately required?
A. Economic Order Quantity (EOQ)
B. Lot-for-Lot (L4L)
C. Fixed Order Quantity (FOQ)
D. Period Order Quantity (POQ)
CORRECT ANSWER: B
Rationale: The Lot-for-Lot rule dictates that the order quantity should
exactly match the net requirements for each period. This means
inventory is ordered only as needed, resulting in minimal average
inventory levels and the lowest possible holding costs. While other
options like EOQ balance holding and ordering costs, they often involve
larger order quantities, leading to higher average inventory.
Question 3: A company uses a periodic review system. If the review
interval is 15 days and the lead time is 5 days, what is the time supply
that the order-up-to level must cover?
A. 5 days
B. 15 days
C. 20 days
D. 25 days
CORRECT ANSWER: C
Rationale: In a periodic review system (P-system), the order-up-to level
must cover the demand during the review interval (T) and the lead time
,(L). This is because an order placed at the review point will not arrive
until after the lead time, and during that lead time, demand continues.
Therefore, the time supply is T + L = 15 + 5 = 20 days.
Question 4: What is the primary purpose of a "Time Fence" in the
context of the Master Production Schedule (MPS)?
A. To increase the frequency of MPS updates for improved
responsiveness.
B. To define a period where system and customer-driven changes to the
MPS are strictly controlled or prohibited.
C. To separate the planning horizon for different product families.
D. To automatically trigger purchase orders for raw materials.
CORRECT ANSWER: B
Rationale: Time fences are boundaries set in the MPS that help
maintain stability. Within the "frozen" zone (or near the fence), changes
to the schedule are typically not allowed due to significant costs already
incurred. Further out (in the "slushy" or "liquid" zones), more flexibility
exists. The primary purpose is to prevent disruptions and maintain a
feasible schedule.
Question 5: A company has an annual demand of 10,000 units, an
ordering cost of $50 per order, and a holding cost of $2 per unit per
year. What is the Economic Order Quantity (EOQ)?
A. 500 units
B. 707 units
, C. 1,000 units
D. 2,500 units
CORRECT ANSWER: B
Rationale: The Economic Order Quantity (EOQ) formula is √(2DS/H),
where D is annual demand, S is the ordering cost per order, and H is the
holding cost per unit per year. Plugging the values in: √(2 × 10,000 × 50 /
2) = √(1,000,) = √(500,000) = 707.1 units.
Question 6: In the Theory of Constraints (TOC), what is the primary
focus for improving throughput?
A. Maximizing the efficiency of all machines and resources.
B. Reducing the cost of raw materials.
C. Identifying and managing the system's constraint (bottleneck).
D. Increasing the number of employees on the production floor.
CORRECT ANSWER: C
Rationale: The Theory of Constraints, as developed by Eliyahu Goldratt,
posits that every system has at least one constraint that limits its overall
throughput. The primary focus of improvement efforts must be on
identifying this constraint, exploiting it to its maximum potential, and
then subordinating all other processes to support it. Improving non-
constraint resources does not increase overall throughput.
Question 7: What does the acronym "MAD" stand for in the context of
demand forecasting?
