CPIM 7 questions and answers with
solutions
inventory - ANSWER Those stocks or items used to support production,
supporting activities and customer service. Demand for inventory may
be dependent or independent.
Inventory Management - ANSWER "the branch of business management
concerned with planning and controlling inventories"
level of service - ANSWER A measure (usually expressed as a percentage)
of satisfying demand through inventory or by the current production
schedule in time to satisfy the customers' requested delivery dates and
quantities. In a make-to-stock environment, level of service is sometimes
calculated as the percentage of orders picked complete from stock upon
receipt of the customer order, the percentage of line items picked
complete, or the percentage of total dollar demand picked complete. In
make-to-order and design-to-order environments, level of service is the
percentage of times the customer-requested or acknowledged date was
met by shipping complete product quantities.
Synonym: measure of service, service level.
See: cycle service level.
,on-time schedule performance - ANSWER A measure (percentage) of
meeting the customer's originally negotiated delivery request date.
Performance can be expressed as a percentage based on the number of
orders, line items, or dollar value shipped on time.
stockout percentage - ANSWER Measure of effectiveness where a
company responds to actual demand or requirements
decoupling inventory - ANSWER An amount of inventory kept between
entities in a manufacturing or distribution network to create
independence between processes or entities. The objective of
decoupling inventory is to disconnect the rate of use from the rate of
supply of the item.
See: buffer.
raw material - ANSWER Purchased items or extracted materials that are
converted via the manufacturing process into components and products.
Work in Progress (WIP) - ANSWER A good or goods in various stages of
completion throughout the plant, including all material from raw
material that has been released for initial processing up to completely
processed material awaiting final inspection and a cceptance as finished
goods inventory.
, finished goods inventory - ANSWER Those items on which all
manufacturing operations, including final test, have been completed.
These products are available for shipment to the customer as either end
items or repair parts.
Synonym: finished products inventory.
See: goods.
distribution inventory - ANSWER Inventory, usually spare parts and
finished goods, located in the distribution system (e.g., in warehouses,
in transit between warehouses and the consumer)
service parts - ANSWER Those modules, components, and elements that
are planned to be used without modification to replace an original part.
Safety Stock - ANSWER 1) In general, a quantity of stock planned to be in
inventory to protect against fluctuations in demand or supply.
2) In the context of master production scheduling, the additional
inventory and capacity planned as protection against forecast errors and
short-term changes in the backlog. Overplanning can be used to create
safety stock.
Synonym: buffer stock, reserve stock.
See: hedge, inventory buffer.
solutions
inventory - ANSWER Those stocks or items used to support production,
supporting activities and customer service. Demand for inventory may
be dependent or independent.
Inventory Management - ANSWER "the branch of business management
concerned with planning and controlling inventories"
level of service - ANSWER A measure (usually expressed as a percentage)
of satisfying demand through inventory or by the current production
schedule in time to satisfy the customers' requested delivery dates and
quantities. In a make-to-stock environment, level of service is sometimes
calculated as the percentage of orders picked complete from stock upon
receipt of the customer order, the percentage of line items picked
complete, or the percentage of total dollar demand picked complete. In
make-to-order and design-to-order environments, level of service is the
percentage of times the customer-requested or acknowledged date was
met by shipping complete product quantities.
Synonym: measure of service, service level.
See: cycle service level.
,on-time schedule performance - ANSWER A measure (percentage) of
meeting the customer's originally negotiated delivery request date.
Performance can be expressed as a percentage based on the number of
orders, line items, or dollar value shipped on time.
stockout percentage - ANSWER Measure of effectiveness where a
company responds to actual demand or requirements
decoupling inventory - ANSWER An amount of inventory kept between
entities in a manufacturing or distribution network to create
independence between processes or entities. The objective of
decoupling inventory is to disconnect the rate of use from the rate of
supply of the item.
See: buffer.
raw material - ANSWER Purchased items or extracted materials that are
converted via the manufacturing process into components and products.
Work in Progress (WIP) - ANSWER A good or goods in various stages of
completion throughout the plant, including all material from raw
material that has been released for initial processing up to completely
processed material awaiting final inspection and a cceptance as finished
goods inventory.
, finished goods inventory - ANSWER Those items on which all
manufacturing operations, including final test, have been completed.
These products are available for shipment to the customer as either end
items or repair parts.
Synonym: finished products inventory.
See: goods.
distribution inventory - ANSWER Inventory, usually spare parts and
finished goods, located in the distribution system (e.g., in warehouses,
in transit between warehouses and the consumer)
service parts - ANSWER Those modules, components, and elements that
are planned to be used without modification to replace an original part.
Safety Stock - ANSWER 1) In general, a quantity of stock planned to be in
inventory to protect against fluctuations in demand or supply.
2) In the context of master production scheduling, the additional
inventory and capacity planned as protection against forecast errors and
short-term changes in the backlog. Overplanning can be used to create
safety stock.
Synonym: buffer stock, reserve stock.
See: hedge, inventory buffer.
