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

Customer service performance is the degree to which a product or service meets or exceeds customer expectations. The most relevant measure of customer service performance is how the customer perceives the service compared to what they expected. This measure reflects the customer's satisfaction and loyalty, which are key factors for business success. Other measures, such as service promised versus measured, customer complaints, or positive feedback, are more related to the supplier's perspective and may not capture the customer's true perception of service quality.Reference: CPIM Part 2 Exam Content Manual, Domain 3: Plan and Manage Demand, Section A: Demand Management, Subsection 4: Customer Service Management, Page 11.

Producing to backorders means that the company only produces goods when there is a confirmed customer order. This strategy is most appropriate during times of highly fluctuating demand, as it allows the company to avoid holding excess inventory that may incur high carrying costs and become obsolete. Producing to backorders also enables the company to adjust its workforce according to the actual demand, which can be easily changed as the question states. This strategy can improve customer satisfaction, as the products are tailored to the specific needs and preferences of each customer. However, producing to backorders also has some drawbacks, such as longer lead times, higher production costs, and lower economies of scale.

The other strategies are less suitable for highly fluctuating demand. Producing at a constant level means that the company produces goods at a fixed rate regardless of the demand fluctuations. This strategy can result in either excess inventory or stockouts, depending on whether the demand is lower or higher than the production level. Producing to the sales forecast means that the company produces goods based on the projected demand for a certain period. This strategy can be effective if the forecast is accurate, but it can also lead to inventory imbalances if the forecast is inaccurate or if there are unexpected changes in demand. Producing to demand means that the company produces goods based on the current demand in the market. This strategy can be responsive and flexible, but it can also be challenging to implement, as it requires high visibility, coordination, and agility in the supply chain.

The S&OP process in an ATO production environment focuses on control of key intermediate part inventory, which are the components or subassemblies that are produced in advance and assembled to order when the customer order is received. By controlling the key intermediate part inventory, the S&OP process can balance the demand and supply of the final products, while reducing the lead time and inventory costs. The key intermediate part inventory is also known as the decoupling point, where the production process switches from MTS to MTO mode. The S&OP process can determine the optimal level of key intermediate part inventory based on the forecast and backlog of customer orders, as well as the production capacity and costs.

The other options are less relevant for the S&OP process in an ATO production environment. End product backlog refers to the customer orders that have not been fulfilled yet. Finished goods inventory refers to the final products that are ready for sale. Raw material inventory refers to the basic materials that are used to produce the components or subassemblies. These types of inventory are more applicable for MTS or MTO production environments, where the production process is either entirely based on forecast or entirely based on sales order. In an ATO production environment, the S&OP process does not need to control these types of inventory, as they are either minimal or nonexistent.Reference: CPIM Part 2 Exam Content Manual, Domain 4: Plan and Manage Supply, Section B: Production Planning and Control, Subsection 1: Production Strategies and Techniques, Page 19;Demand management process in assemble to order (ATO) environment;Assemble-to-Order (ATO): Overview, Examples, Pros and Cons.

Manufacturing lead time is the time required to acquire, manufacture, or ship goods1.It includes the time required for preprocessing, processing, and postprocessing of a finished product2. The formula for manufacturing lead time is:

Manufacturing lead time = Preprocessing time + Processing time + Postprocessing time

Preprocessing time is the time needed for handling the order, making sales order, and preparing supplies2. Processing time is the period when the product is manufactured or collected.Postprocessing time is the time of delivery2.

In this question, we are given the following information:

The product is Item A, which requires Operations 10, 20, and 30 in a work cell

The order quantity is 10 units

The operations require no set up time

The processing times for each operation are:

To find the shortest manufacturing lead time, we need to assume that the preprocessing and postprocessing times are zero, and that the operations can be performed in parallel. This means that the work cell can process 10 units of Item A simultaneously, without any waiting or transportation time.

Therefore, the shortest manufacturing lead time is equal to the longest processing time among the three operations. Since Operation 10 has the longest processing time of 1 hour per unit, the shortest manufacturing lead time is:

Manufacturing lead time = 1 hour x 10 units = 10 hours

However, this answer is not among the options given. Therefore, we need to consider another possibility: that the work cell can only process one unit of Item A at a time, and that the operations must be performed in sequence. This means that each unit of Item A must complete Operation 10 before moving to Operation 20, and then to Operation 30. In this case, the shortest manufacturing lead time is equal to the sum of the processing times for all three operations multiplied by the order quantity. Therefore, the shortest manufacturing lead time is:

Manufacturing lead time = (1 hour + 0.5 hour + 0.5 hour) x 10 units = 20 hours

However, this answer is also not among the options given. Therefore, we need to consider one more possibility: that the work cell can process one unit of Item A at a time, but that the operations can be performed in parallel with overlapping times. This means that as soon as one unit of Item A finishes Operation 10, it moves to Operation 20, while another unit of Item A starts Operation 10. Similarly, as soon as one unit of Item A finishes Operation 20, it moves to Operation 30, while another unit of Item A starts Operation 20. In this case, the shortest manufacturing lead time is equal to the sum of the processing times for all three operations plus the processing times for each operation multiplied by the order quantity minus one. Therefore, the shortest manufacturing lead time is:

Manufacturing lead time = (1 hour + 0.5 hour + 0.5 hour) + (1 hour + 0.5 hour + 0.5 hour) x (10 units - 1) = 12 hours

This answer is among the options given and it is the shortest possible manufacturing lead time under these assumptions. Therefore, the correct answer is B. 12 hours.

ABC classification is an inventory categorization technique that divides items into three classes based on their usage value, which is the product of the number of units sold and the cost per unit. Class A items have the highest usage value and account for a large proportion of the total inventory value, but a small percentage of the number of items. Class B items have a moderate usage value and account for a moderate proportion of the total inventory value and the number of items.Class C items have the lowest usage value and account for a small proportion of the total inventory value, but a large percentage of the number of items1.

An advantage of applying ABC classification to a firm's replenishment items is that it allows planners to focus on critical products. Replenishment items are items that are regularly ordered or produced to maintain a certain level of inventory. By using ABC classification, planners can prioritize the replenishment of class A items, which have the highest impact on the firm's profitability and customer satisfaction.Planners can also apply different inventory management techniques and policies for each class of items, such as more frequent reviews, tighter controls, lower safety stocks, and higher service levels for class A items, and less frequent reviews, simpler controls, higher safety stocks, and lower service levels for class C items234. This way, ABC classification can help planners optimize the replenishment process and reduce costs, waste, and stockouts.

The other options are not advantages of applying ABC classification to a firm's replenishment items, because they are either irrelevant or incorrect.ABC classification does not distinguish independent demand from dependent demand, which are two types of demand that depend on whether the item is sold to customers or used as a component in another item5.ABC classification does not provide better order quantities than the economic order quantity (EOQ), which is a formula that calculates the optimal order quantity that minimizes the total inventory costs6.ABC classification does not allow the firm to utilize time-phased order point (TPOP), which is a method that determines when to place an order based on the projected inventory position and the lead time7.

Third-party logistics (3PL) services are services that involve outsourcing some or all of the logistics functions of a firm, such as transportation, warehousing, distribution, or order fulfillment, to an external provider1. By using 3PL services, a firm can reduce its need to own and operate its own logistics assets, such as trucks, trailers, warehouses, or inventory management systems.These assets are classified as fixed assets on the balance sheet, because they are long-term and tangible assets that are used in the normal course of business2. Therefore, increased use of 3PL services is likely to have the effect of decreasing the fixed assets on a firm's balance sheet.

The other options are not likely effects of increased use of 3PL services on a firm's balance sheet.Retained earnings are the accumulated net income of a firm that is not distributed to shareholders as dividends3. Retained earnings are not directly affected by the use of 3PL services, unless the firm's net income changes as a result of cost savings or revenue growth from outsourcing logistics functions.Accounts receivable are the amounts owed to a firm by its customers for goods or services delivered on credit4. Accounts receivable are not directly affected by the use of 3PL services, unless the firm's sales volume or credit terms change as a result of improved customer service or delivery performance from outsourcing logistics functions.Intangible assets are non-physical assets that have value based on their intellectual or legal rights, such as patents, trademarks, goodwill, or brand names5. Intangible assets are not directly affected by the use of 3PL services, unless the firm's reputation or market position changes as a result of enhanced quality or innovation from outsourcing logistics functions.Reference:

What Is Third Party Logistics (3PL) ? | Definition, Types, Benefits

Fixed Asset - Definition & Examples (Assets = Liabilities + Equity)

Retained Earnings - Definition & Formula

Accounts Receivable - Overview, Examples & Importance

Intangible Asset - Definition & Examples

Compared to traditional supplier relationships, a more strategic view of supplier relationships would require maintaining communication based on trust.Trust is a key factor that enables effective collaboration, information sharing, problem solving, and innovation between supply chain partners12.Trust can also reduce transaction costs, conflicts, and opportunism, and increase commitment, loyalty, and performance34. Therefore, maintaining communication based on trust is essential for developing and sustaining strategic supplier relationships that can create value and competitive advantage for both parties.

The other options are not necessarily required for a more strategic view of supplier relationships, because they are either insufficient or irrelevant. Offering the supplier more business may increase the volume or frequency of transactions, but it does not guarantee a more strategic or long-term relationship. Adopting electronic data interchange (EDI) may improve the efficiency or accuracy of information exchange, but it does not ensure a more collaborative or innovative relationship. Implementing concurrent engineering may enhance the product design or development process, but it does not address the other aspects of a strategic relationship, such as quality, delivery, or risk management.

Obsolescence is the loss of value or usefulness of an item due to changes in technology, fashion, customer preferences, or other factors.Obsolescence is considered a carrying cost, because it is an expense associated with holding inventory over a period of time1.Carrying costs are the various costs a business pays for holding inventory in stock, such as warehousing, insurance, taxes, depreciation, and opportunity costs2.Obsolescence can increase the carrying costs of inventory, because it can reduce the demand and sales potential of the item, and may require the item to be written off or sold at a lower price3.

The other options are not considered carrying costs, because they are not related to holding inventory in stock. Setup is the cost of preparing a machine or a process for production. Transportation is the cost of moving goods from one place to another. Scrap rate is the percentage of defective or unusable units produced in a process. These costs are more related to production or distribution activities than inventory holding activities.

Implosion in distribution requirements planning (DRP) is the process of calculating the gross requirements for a supplying location based on the net requirements of its customers or demand sources1.Implosion is the opposite of explosion, which is the process of calculating the net requirements for a demand source based on the gross requirements of its customers or demand sources2.Implosion and explosion are used to synchronize the supply and demand across different levels of the distribution network3.

An example of implosion in DRP is gathering information from several field locations and aggregating it at the manufacturing facility. This example shows how the manufacturing facility, which is the supplying location, can determine its gross requirements by adding up the net requirements of its field locations, which are its customers or demand sources. This way, the manufacturing facility can plan its production and inventory levels to meet the demand from the field locations.