CPSM - EXAM 2 - INTEGRATION UPDATED ACTUAL
QUESTIONS AND CORRECT ANSWERS
Question:
1. Development Cost
Answer:
An organizations expense for creating a new product or service
Question:
2. Statement of Work (SOW)
Answer:
A statement outlining the specific services a contractor is expected to perform, generally indicating the
type, level and quality of service, as well as the time schedule required.
Question:
3. American National Standards Institute (ANSI)
Answer:
Umbrella organization that issues national standards based on consensus by all stakeholder organizations
Question:
4. Simplification refers to which of the following?
A. Reducing the variety of models of an item
B. Cutting back on the number of suppliers
C. Reducing the number of parts performing the same function
D. Moving to a program of product and supplier pre-approval
Answer:
Option (A) is correct. Simplification is defined as a reduction in the number of sizes and designs of an item
that an organization uses.
Question:
5. Standardization is BEST described as an agreement upon specific:
A. Key business performance indicators.
B. Quality, designs, sizes, types, materials or services.
C. Forms and methods of manufacture.
D. Brands and equivalent generic products.
Answer:
Option (B) is correct because it includes the widest range of considerations directly related to a standards
program.
,Question:
6. Supply management has taken on a much more strategic role within organizations. They are often
looked to for solutions that have been traditionally out of scope. Finance and operations have asked a
supply manager to participate in a cost management program to help her organization generate more
working capital.
Which of the following is the BEST way for the supply manager to contribute to that goal?
A. Establishing a standard cost system
B. Employing a cost modeling tool
C. Focusing on a standardization program
D. Implementing a contribution to margin analysis
Answer:
Option (C) is correct. Standardization will improve leverage in acquiring a smaller group of products in
higher volume, pro- viding lower prices. Standardization will also reduce inventory because few items are
carried. Both of these will result in increased cash, and therefore working capital for the organization.
Question:
7. A supply chain manager has been tasked with developing and implementing material and service level
standardization programs.
Which of the following will be the BEST way in which the supply chain manager can put this program in
place?
A. Increase outsourcing and international sourcing activities for better purchase price variance
B. Identify a system of exchanging jointly developed sales forecast and inventory replenishment schedules
with suppliers
C. Define a process to reduce product complexity and the number of required parts, operations, and SKUs
D. Negotiate price savings and volume leveraging with suppliers
Answer:
Option (C) is correct. Standardization reduces operations' steps and reduces the number of parts needed,
thereby lowering both the product's cost (including procurement and materials management) and the costs
for servicing the product.
Question:
8. Capacity Requirements Planning (CRP)
Answer:
Process of establishing, measuring and adjusting the levels of capacity in an organization within the
context of Manufacuring resource planning (MRP II)
Question:
9. Cycle Counting
Answer:
A physical stock checking system in which the inventory is divided into groups which are physically
counted at predetermined intervals, depending upon their ABC classification. Thus, the physical inventory
counting goes on continuously without interrupting operations or storeroom activities. Also referred to as
"continuous inventory".
Question:
10. Demand Planning
, Answer:
The function of identifying demands for products and services to support the marketplace. It encompasses
the activities of forecasting, order planning and determining outside warehouse requirements. production
balancing and spare parts.
Question:
11. Dependent Demand
Answer:
Derived from or contingent upon the demand for another component or finished product
Question:
12. Distribution Resource Planning (DRPII)
Answer:
A time-phased computerized inventory system to replenish inventory in multi-echelon warehousing
systems. It includes planning for warehouse space, manpower requirements, transportation alternatives and
financial flows.
Question:
13. Enterprise resource planning (ERP)
Answer:
usually refers to a particular type of computer software package that integrates various functions within an
organization. It may be used to enable processes such as forecasting, materials management and
purchasing.
Question:
14. Forecast
Answer:
A prediction based on quantitative or qualitative data. It attempts to predict future activities, such as
demand, with sufficient accuracy to be the basis of planning
Question:
15. Master Production Schedule (MPS)
Answer:
A plan outlining the mix of end products to be produced during a given week
Question:
16. Master Schedule
Answer:
a forward-looking plan for production or Manufacuring. It includes a forecast over defined dates, plus
customer orders, projected available balance, available-to-promise and the master production schedule.
The master schedule uses the forecast, production plan and other considerations such as backlog,
availability of material, availability of capacity and management policies and goals to establish a master
schedule.
Question:
17. Material Requirements Planning (MRP)
QUESTIONS AND CORRECT ANSWERS
Question:
1. Development Cost
Answer:
An organizations expense for creating a new product or service
Question:
2. Statement of Work (SOW)
Answer:
A statement outlining the specific services a contractor is expected to perform, generally indicating the
type, level and quality of service, as well as the time schedule required.
Question:
3. American National Standards Institute (ANSI)
Answer:
Umbrella organization that issues national standards based on consensus by all stakeholder organizations
Question:
4. Simplification refers to which of the following?
A. Reducing the variety of models of an item
B. Cutting back on the number of suppliers
C. Reducing the number of parts performing the same function
D. Moving to a program of product and supplier pre-approval
Answer:
Option (A) is correct. Simplification is defined as a reduction in the number of sizes and designs of an item
that an organization uses.
Question:
5. Standardization is BEST described as an agreement upon specific:
A. Key business performance indicators.
B. Quality, designs, sizes, types, materials or services.
C. Forms and methods of manufacture.
D. Brands and equivalent generic products.
Answer:
Option (B) is correct because it includes the widest range of considerations directly related to a standards
program.
,Question:
6. Supply management has taken on a much more strategic role within organizations. They are often
looked to for solutions that have been traditionally out of scope. Finance and operations have asked a
supply manager to participate in a cost management program to help her organization generate more
working capital.
Which of the following is the BEST way for the supply manager to contribute to that goal?
A. Establishing a standard cost system
B. Employing a cost modeling tool
C. Focusing on a standardization program
D. Implementing a contribution to margin analysis
Answer:
Option (C) is correct. Standardization will improve leverage in acquiring a smaller group of products in
higher volume, pro- viding lower prices. Standardization will also reduce inventory because few items are
carried. Both of these will result in increased cash, and therefore working capital for the organization.
Question:
7. A supply chain manager has been tasked with developing and implementing material and service level
standardization programs.
Which of the following will be the BEST way in which the supply chain manager can put this program in
place?
A. Increase outsourcing and international sourcing activities for better purchase price variance
B. Identify a system of exchanging jointly developed sales forecast and inventory replenishment schedules
with suppliers
C. Define a process to reduce product complexity and the number of required parts, operations, and SKUs
D. Negotiate price savings and volume leveraging with suppliers
Answer:
Option (C) is correct. Standardization reduces operations' steps and reduces the number of parts needed,
thereby lowering both the product's cost (including procurement and materials management) and the costs
for servicing the product.
Question:
8. Capacity Requirements Planning (CRP)
Answer:
Process of establishing, measuring and adjusting the levels of capacity in an organization within the
context of Manufacuring resource planning (MRP II)
Question:
9. Cycle Counting
Answer:
A physical stock checking system in which the inventory is divided into groups which are physically
counted at predetermined intervals, depending upon their ABC classification. Thus, the physical inventory
counting goes on continuously without interrupting operations or storeroom activities. Also referred to as
"continuous inventory".
Question:
10. Demand Planning
, Answer:
The function of identifying demands for products and services to support the marketplace. It encompasses
the activities of forecasting, order planning and determining outside warehouse requirements. production
balancing and spare parts.
Question:
11. Dependent Demand
Answer:
Derived from or contingent upon the demand for another component or finished product
Question:
12. Distribution Resource Planning (DRPII)
Answer:
A time-phased computerized inventory system to replenish inventory in multi-echelon warehousing
systems. It includes planning for warehouse space, manpower requirements, transportation alternatives and
financial flows.
Question:
13. Enterprise resource planning (ERP)
Answer:
usually refers to a particular type of computer software package that integrates various functions within an
organization. It may be used to enable processes such as forecasting, materials management and
purchasing.
Question:
14. Forecast
Answer:
A prediction based on quantitative or qualitative data. It attempts to predict future activities, such as
demand, with sufficient accuracy to be the basis of planning
Question:
15. Master Production Schedule (MPS)
Answer:
A plan outlining the mix of end products to be produced during a given week
Question:
16. Master Schedule
Answer:
a forward-looking plan for production or Manufacuring. It includes a forecast over defined dates, plus
customer orders, projected available balance, available-to-promise and the master production schedule.
The master schedule uses the forecast, production plan and other considerations such as backlog,
availability of material, availability of capacity and management policies and goals to establish a master
schedule.
Question:
17. Material Requirements Planning (MRP)
