CPSM EXAM 2 INTEGRATION UPDATED 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 ser-vices a contractor is expected to per-form, 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 na-tional standards based on consensus by all stakeholder
organizations
Question:
4. Simplification refers to which of the follow-ing?
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 suppli-
er 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 in-cludes the widest range of consider-ations 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. Stan-dardization 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 de-
veloped sales forecast and inventory replen-ishment schedules with suppliers
C. Define a process to reduce product com-
plexity and the number of required parts, op-erations, and SKUs
D. Negotiate price savings and volume lever-
aging with suppliers
Answer:
Option (C) is correct. Standardization reduces operations' steps and reduces the number of parts
needed, there-by lowering both the product's cost (including procurement and materials management)
and the costs for servic-ing the product.
Question:
8. Capacity Requirements Planning (CRP)
Answer:
Process of establishing, measuring and adjusting the levels of capaci-ty in an organization within the
con-text of Manufacuring resource plan-ning (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, depend-ing 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 plan-ning and determining outside ware-house
requirements. production bal-ancing 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 mul-ti-echelon warehousing
systems. It in-cludes planning for warehouse space, manpower requirements, transporta-tion
alternatives and financial flows.
Question:
13. Enterprise resource planning (ERP)
Answer:
usually refers to a particular type of computer software package that inte-grates various functions
within an or-ganization. It may be used to enable processes such as forecasting, materi-als
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 prod-ucts to be produced during a given week
Question:
16. Master Schedule
Answer:
a forward-looking plan for produc-tion or Manufacuring. It includes a forecast over defined dates,
plus cus-tomer orders, projected available bal-ance, available-to-promise and the master production
schedule. The mas-ter schedule uses the forecast, pro-duction plan and other considerations such as
backlog, availability of materi-al, availability of capacity and manage-ment policies and goals to
establish a master schedule.
Question:
17. Material Requirements Planning (MRP)
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 ser-vices a contractor is expected to per-form, 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 na-tional standards based on consensus by all stakeholder
organizations
Question:
4. Simplification refers to which of the follow-ing?
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 suppli-
er 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 in-cludes the widest range of consider-ations 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. Stan-dardization 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 de-
veloped sales forecast and inventory replen-ishment schedules with suppliers
C. Define a process to reduce product com-
plexity and the number of required parts, op-erations, and SKUs
D. Negotiate price savings and volume lever-
aging with suppliers
Answer:
Option (C) is correct. Standardization reduces operations' steps and reduces the number of parts
needed, there-by lowering both the product's cost (including procurement and materials management)
and the costs for servic-ing the product.
Question:
8. Capacity Requirements Planning (CRP)
Answer:
Process of establishing, measuring and adjusting the levels of capaci-ty in an organization within the
con-text of Manufacuring resource plan-ning (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, depend-ing 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 plan-ning and determining outside ware-house
requirements. production bal-ancing 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 mul-ti-echelon warehousing
systems. It in-cludes planning for warehouse space, manpower requirements, transporta-tion
alternatives and financial flows.
Question:
13. Enterprise resource planning (ERP)
Answer:
usually refers to a particular type of computer software package that inte-grates various functions
within an or-ganization. It may be used to enable processes such as forecasting, materi-als
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 prod-ucts to be produced during a given week
Question:
16. Master Schedule
Answer:
a forward-looking plan for produc-tion or Manufacuring. It includes a forecast over defined dates,
plus cus-tomer orders, projected available bal-ance, available-to-promise and the master production
schedule. The mas-ter schedule uses the forecast, pro-duction plan and other considerations such as
backlog, availability of materi-al, availability of capacity and manage-ment policies and goals to
establish a master schedule.
Question:
17. Material Requirements Planning (MRP)
