APICS CPIM-Part-2 Practice Test - Questions Answers, Page 11

Locating service facilities differs from locating manufacturing or distribution facilities primarily because service location decisions are driven by revenue concerns, while manufacturing and distribution location decisions are driven by costs. This is because service facilities are usually closer to the customers and depend on their demand and preferences.Service facilities need to consider factors such as customer convenience, accessibility, visibility, traffic, and competition when choosing a location, as these factors affect the revenue potential and market share of the service facility1. Manufacturing and distribution facilities, on the other hand, are usually farther from the customers and depend on their supply chain efficiency and effectiveness.Manufacturing and distribution facilities need to consider factors such as transportation, labor, utilities, taxes, and regulations when choosing a location, as these factors affect the cost structure and profitability of the facility2.

The other options are not correct.Competition is a factor that affects both service and manufacturing or distribution location decisions, as it influences the market attractiveness and strategic positioning of the facility3.Real estate costs are also a factor that affects both service and manufacturing or distribution location decisions, as they represent a significant portion of the fixed costs of the facility4.Surveying customers or suppliers is a method that can be used for both service and manufacturing or distribution location decisions, as it provides valuable information about the demand and supply characteristics of the market5.

An effective process to create meaningful change begins with identifying and discussing a past crisis, a potential crisis, or major opportunities.This step is important because it helps to create a sense of urgency and motivation for the change, as well as to clarify the vision and goals of the change1. A past crisis can be used as a learning opportunity to analyze what went wrong and how to prevent it from happening again. A potential crisis can be used as a warning signal to anticipate and prepare for the possible challenges and risks.A major opportunity can be used as a catalyst to seize the competitive advantage and create value for the organization and its stakeholders2.

The other options are not the best ways to start an effective process to create meaningful change.Reviewing financial outcomes and metrics over the last 4 quarters year-over-year may provide some insights into the performance and profitability of the organization, but it may not reveal the underlying causes or drivers of the change, or the future trends and scenarios that may affect the organization3.Refreshing corporate strategy to align with current marketplace realities for your industry may be a necessary step in the change process, but it may not be sufficient to generate buy-in and commitment from the people who are involved in or affected by the change4.Using consultants to provide in-depth analysis of current management opportunities may be a helpful way to obtain external perspectives and expertise, but it may not ensure that the change is aligned with the organization's culture, values, and capabilities5.

Reducing distribution network inventory days of supply will have the impact of increasing turnovers and reducing cash-to-cash cycle time.Distribution network inventory days of supply is a measure of how long it takes for a company to sell its entire inventory in its distribution network, which includes the warehouses and transportation systems that deliver the products to the customers1.It is calculated by dividing the average inventory by the cost of sales per day1. A lower distribution network inventory days of supply indicates that the company is selling its inventory faster and more efficiently, while a higher distribution network inventory days of supply indicates that the company is holding too much inventory or having difficulty selling its products.

Turnovers, also known as inventory turnover or stock turnover, is a measure of how many times a company sells and replaces its inventory in a given period.It is calculated by dividing the cost of goods sold by the average inventory2. A higher turnover indicates that the company is selling its inventory quickly and efficiently, while a lower turnover indicates that the company is holding too much inventory or having difficulty selling its products.

Cash-to-cash cycle time, also known as cash conversion cycle or net operating cycle, is a measure of how long it takes for a company to convert its cash outflows into cash inflows.It is calculated by adding the days sales outstanding (DSO), which is the average time it takes for customers to pay for their purchases, and the distribution network inventory days of supply, and subtracting the days payable outstanding (DPO), which is the average time it takes for the company to pay its suppliers3. A shorter cash-to-cash cycle time indicates that the company is managing its cash flow more effectively, while a longer cash-to-cash cycle time indicates that the company is tying up more cash in its operations.

Therefore, reducing distribution network inventory days of supply will have the impact of increasing turnovers and reducing cash-to-cash cycle time, as it will decrease the average inventory level, increase the cost of sales per day, and decrease the distribution network inventory days of supply component in the cash-to-cash cycle time formula. This will improve the efficiency and profitability of the company's operations and reduce its working capital needs.

Time-to-market (TTM) is the length of time it takes to develop a product from conception until it is released to the market and is available for sale1.Reducing TTM can provide a competitive advantage, as it can help a company to capture customer demand, respond to market changes, and increase profitability1.

One strategy to decrease TTM for a new product family is to increase collaboration between the buyer and the supplier of new components.Collaboration can involve sharing information, resources, risks, and rewards among supply chain partners to achieve mutual benefits2.By collaborating with the supplier of new components, the buyer can improve the quality, reliability, and innovation of the components, as well as reduce the costs, lead times, and uncertainties associated with them2. This can speed up the product development process and reduce the time and resources required to bring the new product family to the market.

The other options are not effective strategies to decrease TTM for a new product family.Decreasing the number of suppliers for components of the new product may reduce the complexity and variability of the supply chain, but it may also increase the dependency and vulnerability on a single or few suppliers, which may affect the availability and performance of the components3.Decreasing the purchasing lot size for the new product's components may reduce the inventory carrying costs and risks, but it may also increase the ordering costs and frequency, which may affect the efficiency and responsiveness of the supply chain4. Increasing the safety stocks for the new product's components may reduce the risk of stockouts and delays, but it may also increase the inventory carrying costs and risks, as well as tie up cash flow and working capital.

A product family is a group of products that share common characteristics, components, or functions, and that satisfy a similar customer need or market segment1.A bill of material (BOM) is a list of all the materials, components, and subassemblies required to manufacture a product2. A BOM can have different levels, depending on the complexity and structure of the product. The most common levels are:

Final assembly level: This is the highest level of the BOM, where the finished product is shown as a single item.This level contains the basic information about the product, such as its name, description, quantity, and unit of measure2.

Subassembly level: This is the intermediate level of the BOM, where the subassemblies or modules that make up the final product are shown as separate items.A subassembly is a group of components or parts that are assembled together to perform a specific function within the final product3.This level contains the information about the subassemblies, such as their names, descriptions, quantities, units of measure, and relationships to the final product2.

Component level: This is the lowest level of the BOM, where the individual components or parts that make up the subassemblies or the final product are shown as separate items.A component is a basic element or material that is used to manufacture a subassembly or a final product4.This level contains the information about the components, such as their names, descriptions, quantities, units of measure, and relationships to the subassemblies or the final product2.

The most appropriate level of the BOM to forecast for a product family depends on several factors, such as the demand variability, production lead time, inventory cost, and customer preference of each level5.However, in general, it is advisable to forecast at the highest possible level of aggregation that still meets the customer requirements and expectations5.This is because forecasting at a higher level can reduce the forecast error and uncertainty, improve the forecast accuracy and reliability, and simplify the forecasting process5.

Therefore, for a product family that consists of 46 items, each having 5 features available and 6 options available, it would be most appropriate to forecast at the final assembly level items. This is because forecasting at this level can capture the overall demand pattern and trend of the product family, without getting into too much detail or complexity.Forecasting at this level can also allow for more flexibility and responsiveness in meeting customer needs and preferences by using postponement strategies6.Postponement strategies involve delaying some aspects of production or customization until after receiving customer orders6. For example, instead of forecasting and producing each item with each feature and option in advance, which would result in 46 x 5 x 6 = 1380 different combinations, the company can forecast and produce only 46 items at the final assembly level and then add features and options later according to customer orders.

The other options are not as appropriate as forecasting at the final assembly level items. Forecasting at the subassembly level items may be too detailed and complex for a product family with many features and options available. Forecasting at this level may result in higher forecast error and uncertainty, lower forecast accuracy and reliability, and more complicated forecasting process. Forecasting at this level may also reduce flexibility and responsiveness in meeting customer needs and preferences by committing resources too early in production. Forecasting at the component level items may be even more detailed and complex than forecasting at the subassembly level items. Forecasting at this level may have all the disadvantages mentioned above, as well as increase inventory cost and risk by holding too many components in stock.

The bullwhip effect is a supply chain phenomenon that causes fluctuations in demand to amplify as they move upstream, from the consumer to the retailer, to the distributor and then to the producer1.The bullwhip effect can result in inefficiencies and costs such as excess inventory, lost revenues, superfluous capacity and poor customer service1.

One of the activities that would be effective to mitigate the bullwhip effect is to reduce lead times, which are the time intervals between placing an order and receiving the goods2.Reducing lead times can help to reduce the uncertainty and variability in demand, as well as improve the responsiveness and flexibility of the supply chain2. By reducing lead times, the supply chain partners can order less frequently and in smaller quantities, while still meeting customer demand.This can reduce the need for safety stock, cycle stock and pipeline stock, and thus lower the inventory carrying costs and risks2.

The other options are not effective activities to mitigate the bullwhip effect.Implementing track and trace technology, which is a method for tracking the origin, history, location and status of a product or its parts throughout the supply chain3, may help to improve the visibility and transparency of the supply chain, but it may not reduce the demand fluctuations or inventory imbalances caused by the bullwhip effect.Using a push system, which is a production system where goods are produced based on forecasted demand rather than actual customer orders4, may increase the risk of overproduction or underproduction, as well as create more inventory and waste in the supply chain.Increasing inventory, which is the stock of goods or materials held by a company to meet customer demand5, may increase the inventory carrying costs and risks, as well as tie up cash flow and working capital.

The most appropriate production output reporting method for repetitive manufacturing is backflush.Repetitive manufacturing is a production system where the same or similar products are produced in large quantities or in a continuous flow1.Backflush is a method of reporting output and consumption of materials at the end of the production process, rather than at each operation or stage2. Backflush can simplify and streamline the production output reporting process, as it eliminates the need for tracking and recording each individual transaction or movement of materials and components.Backflush can also reduce the paperwork, errors, and costs associated with production output reporting2.

The other options are not as appropriate as backflush for repetitive manufacturing.Operation-by-operation is a method of reporting output and consumption of materials at each operation or stage of the production process3. This method can provide more detailed and accurate information about the production performance and costs, but it can also be more complex and time-consuming, as it requires tracking and recording each individual transaction or movement of materials and components.Count point is a method of reporting output and consumption of materials at selected points or milestones in the production process4. This method can provide a balance between detail and simplicity, but it can also introduce errors or discrepancies, as it requires estimating or extrapolating the output and consumption of materials between the count points.Job tickets are documents that record the time, materials, and costs associated with a specific job or order5. This method can provide more flexibility and customization, but it can also be more suitable for job shop or batch production systems, where different products are produced in small quantities or on demand.

Point-of-use storage is a stock location system that places inventory close to where it is needed in the production process, reducing transportation and handling costs and improving efficiency. It is often used in repetitive manufacturing, lean environment, where the demand is stable and predictable, and the inventory is replenished frequently. Fixed location and central storage are stock location systems that store inventory in a designated area, which may require more space and movement. Floating location is a stock location system that assigns inventory to any available space, which may cause confusion and inefficiency.Reference: CPIM Exam Content Manual Version 7.0, Domain 5: Plan and Manage Inventory, Section 5.2: Inventory Management Methods, p. 32.

In a lean environment, one uses material requirements planning (MRP) processing primarily to create plans to share with suppliers. MRP is a software-based system that calculates the quantity and timing of materials needed for production, based on the master production schedule, the bill of materials, and the inventory status. MRP helps to coordinate the flow of materials from suppliers to the production process, reducing waste and inventory costs. MRP can also generate purchase orders, work orders, and other documents to communicate the plans with suppliers and internal departments. MRP does not calculate average daily demand, which is a measure of the average amount of a product or service that is sold or consumed per day. MRP does not determine the kanban circuit locations, which are the physical places where kanban cards or containers are exchanged between processes in a pull system. MRP does not determine where to use supermarkets, which are locations where a small amount of inventory is kept to buffer against fluctuations in demand or supply.Reference: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.1: Supply Planning Concepts, p. 24;Lean MRP;Manufacturing resource planning.