APICS CPIM-Part-2 Practice Test - Questions Answers, Page 12

Customer relationship management (CRM) is a program that uses data and technology to manage the interactions and relationships with customers. CRM helps to understand the needs, preferences, and behaviors of customers, and to provide them with better products, services, and experiences. In a rapidly changing business environment, a primary advantage of an effective CRM program is earlier identification of shifts in customer preferences. This means that CRM can help to detect and anticipate the changes in customer demand, tastes, or expectations, and to respond accordingly. This can help to improve customer satisfaction, loyalty, and retention, as well as to gain a competitive edge in the market. CRM does not necessarily reduce forecast variability, which is the degree of difference between the actual demand and the forecasted demand. CRM does not necessarily reduce customer order changes, which are the modifications or cancellations of orders by customers. CRM does not necessarily reduce customer defections, which are the losses of customers to competitors or other alternatives.Reference: CPIM Exam Content Manual Version 7.0, Domain 3: Plan and Manage Demand, Section 3.1: Demand Management Concepts, p. 16; Customer relationship management; Customer Relationship Management (CRM) Definition.

Adopting a lean approach to manage supply chain throughput rather than a more traditional approach means that more capacity may be required. Throughput is the rate at which a system produces or processes its output. A lean approach is a philosophy that aims to eliminate waste and improve efficiency by focusing on customer value, continuous improvement, and pull systems. A traditional approach is a philosophy that relies on forecasting, push systems, and large batch sizes. A lean approach may require more capacity because it reduces inventory levels, buffers, and safety stocks, which may expose the system to more variability and uncertainty. More capacity may be needed to cope with fluctuations in demand or supply, and to maintain high service levels. A lean approach does not necessarily require less training, as it involves empowering employees, cross-training them, and involving them in problem-solving and improvement activities. A lean approach does not necessarily require more inventory, as it aims to minimize inventory and its associated costs. A lean approach does not necessarily result in longer cycle times, as it strives to reduce lead times, setup times, and waiting times.Reference: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.2: Supply Planning Methods, p. 26; Lean Manufacturing; Throughput.

Activity-based costing (ABC) is a method of allocating costs to products or services based on the activities that consume resources in the production or delivery process. ABC identifies the cost drivers, which are the factors that cause or influence the amount of resources used for each activity. ABC then assigns costs to products or services based on the amount of cost drivers they use. An advantage of ABC is that it uses cost drivers to allocate costs to products, which provides a more accurate and realistic picture of the cost structure and profitability of each product or service. ABC helps to identify the value-added and non-value-added activities, and to eliminate or reduce the waste and inefficiency in the process. ABC does not allow raw material costs to be allocated on a per unit basis, as raw material costs are usually considered as direct costs that can be traced to each product or service. ABC does not make it easier to establish standard costs, which are the predetermined or expected costs of producing or delivering a product or service. ABC does not enable overhead costs to be allocated evenly across all products, as overhead costs are the indirect costs that cannot be traced to each product or service. ABC allocates overhead costs based on the cost drivers, which may vary for different products or services.Reference: CPIM Exam Content Manual Version 7.0, Domain 8: Manage Quality, Continuous Improvement, and Technology, Section 8.2: Continuous Improvement Concepts, p. 46; Activity-Based Costing (ABC) Definition; Activity-based costing.

A priority control technique is a method of determining the sequence and timing of production orders in a manufacturing system. A priority control technique can be either push or pull, depending on whether the production orders are initiated by the upstream or downstream processes. A cellular production system is a process of manufacturing that organizes the machines and workers into self-contained cells that can produce different products efficiently and flexibly. A cellular production system is usually based on the principles of lean manufacturing and group technology, which aim to eliminate waste and improve quality.

A pull production activity control (PAC) is a priority control technique that is most appropriate for a firm using a cellular production system. A pull PAC is a method of controlling the flow of materials and work-in-progress in a manufacturing system by using signals from the downstream processes to trigger the release of production orders from the upstream processes. A pull PAC helps to reduce inventory, lead time, and overproduction, as well as to synchronize the production with the customer demand. A pull PAC can be implemented using various techniques, such as kanban cards, containers, or electronic signals.

A shortest processing time (SPT) rule is a priority control technique that assigns the highest priority to the production order that has the shortest processing time at each workstation. An SPT rule helps to minimize the average waiting time and flow time of the production orders, as well as to increase the utilization of the machines and workers. However, an SPT rule does not consider the due dates or the customer demand of the production orders, and may result in poor customer service or low delivery performance.

A distribution requirements planning (DRP) is a priority control technique that determines the quantity and timing of finished goods to be delivered to various distribution centers or customers. A DRP is based on the forecasted demand, the inventory status, and the transportation lead time of the finished goods. A DRP helps to optimize the inventory level, reduce stockouts, and improve customer service. However, a DRP is not suitable for a cellular production system, as it does not control the flow of materials and work-in-progress within the manufacturing system.

A push production activity control (PAC) is a priority control technique that initiates the production orders based on the master production schedule or the forecasted demand from the upstream processes. A push PAC releases the production orders in batches or lots, regardless of the capacity or status of the downstream processes. A push PAC may result in high inventory, long lead time, and overproduction, as well as low flexibility and responsiveness to customer demand. A push PAC is not compatible with a cellular production system, as it contradicts the principles of lean manufacturing and group technology.Reference: CPIM Exam Content Manual Version 7.0, Domain 6: Plan, Manage, and Execute Detailed Schedules, Section 6.1: Detailed Scheduling Concepts, p. 36;Cellular manufacturing; [Production Activity Control].

The master production schedule (MPS) and final assembly schedule (FAS) are most closely linked in the assemble-to-order (ATO) production strategy. ATO is a production strategy that produces customized products or services by assembling standardized components or modules according to customer specifications. The MPS is a plan that specifies the quantity and timing of finished products to be produced in a given period. The FAS is a plan that specifies the quantity and timing of final assembly operations to be performed in a given period. In the ATO strategy, the MPS and FAS are closely linked because the MPS determines the demand for the finished products, and the FAS determines the demand for the components or modules. The MPS and FAS are synchronized to ensure that the components or modules are available when needed for the final assembly, and that the finished products are delivered on time to the customers.

The MPS and FAS are not closely linked in the other production strategies. Make-to-stock (MTS) is a production strategy that produces standardized products or services in advance of customer demand, and stores them in inventory until they are sold. The MPS is based on the forecasted demand, and the FAS is not relevant for this strategy, as there is no customization involved. Make-to-order (MTO) is a production strategy that produces customized products or services from raw materials or components after receiving customer orders. The MPS is based on the actual customer orders, and the FAS is not relevant for this strategy, as there is no assembly involved. Engineer-to-order (ETO) is a production strategy that produces customized products or services that require engineering design or modification after receiving customer orders. The MPS is based on the actual customer orders, and the FAS is not relevant for this strategy, as there is no standardization involved.Reference: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.1: Supply Planning Concepts, p. 23; Master Production Schedule; Final Assembly Schedule; Assemble to order.

Full pegging is a method of tracing the relationship between supply and demand in a manufacturing system. Full pegging shows the link between each demand and its corresponding supply, as well as the link between each demand and the highest-level order that triggered it. Full pegging helps to identify the impact of changes in demand or supply on the production plan, and to make adjustments accordingly. Full pegging is most beneficial in an assemble-to-order (ATO) environment, where products are customized by assembling standardized components or modules according to customer specifications. In an ATO environment, full pegging can show the connection between the finished products, the components or modules, and the customer orders. This can help to optimize the inventory level, reduce lead time, and improve customer service.

Full pegging is not very useful in the other production environments. Distribute-to-order is a production strategy that delivers finished products from inventory to customers based on their orders. There is no customization or assembly involved in this strategy, so full pegging is not needed. Make-to-order is a production strategy that produces customized products from raw materials or components after receiving customer orders. There is no standardization or modularization involved in this strategy, so full pegging is not applicable. Make-to-stock is a production strategy that produces standardized products in advance of customer demand, and stores them in inventory until they are sold. There is no customization or assembly involved in this strategy, so full pegging is not relevant.Reference: CPIM Exam Content Manual Version 7.0, Domain 4: Plan and Manage Supply, Section 4.1: Supply Planning Concepts, p. 23;Full Pegging; Assemble to order.

Production activity control (PAC) is the function of managing the flow of materials and work-in-progress in a manufacturing system. PAC is responsible for executing the master production schedule and the material requirements plan, as well as for planning, implementing, and monitoring the production activities. PAC aims to ensure that the required resources are available, that the production orders are released and completed on time, and that the quality and quantity standards are met. A result of effective PAC is that the actual input/output matches the planned input/output. This means that the actual amount and timing of materials, labor, and machines used for production are consistent with the planned amount and timing. This indicates that the production process is efficient, reliable, and synchronized with the demand. This also helps to reduce inventory, lead time, and waste.

The other options are not necessarily results of effective PAC. Less scrap and rework on the shop floor may be a result of effective quality control, which is a separate function from PAC. Quality control is concerned with inspecting and testing the products or services to ensure that they meet the specifications and standards. Fewer machine hours are required for production may be a result of effective process improvement, which is a separate function from PAC. Process improvement is concerned with analyzing and enhancing the production methods and techniques to increase productivity and performance. Available capacity is increased may be a result of effective capacity planning, which is a separate function from PAC. Capacity planning is concerned with determining and adjusting the optimal level of resources needed to meet the demand.Reference:Production Activity Control - Tutorial;Production Control: Process, Types and Best Practices - ProjectManager;Production control - Wikipedia.

A queue is the number of hours that a work order sits in front of a work center before it starts.It also includes the move time required to physically move partially completed items from the previous operation to the next work center1.A queue is used to provide a buffer between the time that a component arrives at a machine or work center and when the operation actually starts2.A queue can help to neutralize delays in previous operations and to reduce the waiting time and flow time of the work orders3.

An order that moves into a work center on schedule following completion of a previous operation will move into the queue in priority sequence. This means that the order will be placed in the queue according to its priority level, which is determined by the priority control technique used for the production system.A priority control technique is a method of determining the sequence and timing of production orders in a manufacturing system4. Some examples of priority control techniques are first-come, first-served (FCFS), shortest processing time (SPT), earliest due date (EDD), and critical ratio (CR). Depending on the priority control technique, an order may move to the beginning, end, or middle of the queue.

An order will not necessarily move to the end or the beginning of the queue, as these positions depend on the priority level of the order and the other orders in the queue. An order will not move into the queue when there is capacity available, as this implies that there is no queue at all.Capacity is the amount of time or resources available for production at a work center5. Capacity can be affected by factors such as machine availability, labor skills, setup time, and maintenance.Capacity planning is a function of determining and adjusting the optimal level of resources needed to meet the demand5.

Carrying cost is the cost of holding inventory over a period of time. Carrying cost includes the cost of storage, insurance, taxes, obsolescence, spoilage, and opportunity cost of capital. Carrying cost is usually expressed as a percentage of the inventory value per year. An order point is the level of inventory that triggers a replenishment order. An order point is calculated based on the demand rate, the lead time, and the safety stock. An order point is used to maintain a balance between inventory availability and inventory cost. A planner who chooses to increase the order point for a raw material is most likely to increase the carrying cost, as a higher order point means a higher average inventory level, which in turn means a higher carrying cost. Increasing the order point may reduce the risk of stockouts and improve customer service, but it also increases the inventory investment and its associated costs.

The other options are not likely to increase as a result of increasing the order point. Ordering cost is the cost of placing and receiving an order. Ordering cost includes the cost of processing, transportation, inspection, and setup. Ordering cost is usually expressed as a fixed amount per order. Ordering cost is not affected by the order point, but by the order quantity and the number of orders. Landed cost is the total cost of delivering a product or service to the customer. Landed cost includes the cost of production, transportation, taxes, duties, and fees. Landed cost is usually expressed as a percentage of the product or service value. Landed cost is not affected by the order point, but by the sourcing, pricing, and logistics decisions. Product cost is the total cost of producing a product or service. Product cost includes the cost of materials, labor, and overhead. Product cost is usually expressed as a variable amount per unit. Product cost is not affected by the order point, but by the production methods, techniques, and efficiency.Reference: CPIM Exam Content Manual Version 7.0, Domain 5: Plan and Manage Inventory, Section 5.1: Inventory Management Concepts, p. 30; Order Point; Carrying Cost.