APICS CSCP Practice Test - Questions Answers, Page 18

The implementation of major enterprise-wide changes to eliminate or significantly reduce waste is most closely related to the concept of Lean. Here's a detailed explanation:

Lean Definition: Lean is a systematic approach to identifying and eliminating waste (non-value-added activities) through continuous improvement by flowing the product at the demand of the customer.

Key Principles:

Value Identification: Understanding what value means from the customer's perspective.

Value Stream Mapping: Analyzing the flow of materials and information currently required to bring a product or service to the customer.

Flow Creation: Ensuring that the value-creating steps occur in a tight sequence so the product flows smoothly towards the customer.

Pull System: Producing only what is needed by the customer and in the quantities needed.

Perfection Pursuit: Continually striving to perfect the process by eliminating further waste.

Major Changes for Waste Elimination: Lean focuses on broad changes across the organization to minimize waste such as overproduction, waiting, transportation, over-processing, inventory, motion, and defects.

Lean Tools: Various tools and techniques are used in Lean such as 5S, Value Stream Mapping, Kaizen, and Kanban, but the overarching goal of Lean is to drive significant, enterprise-wide waste reduction and efficiency improvements.

Womack, J. P., & Jones, D. T. (1996). Lean Thinking: Banish Waste and Create Wealth in Your Corporation.

Liker, J. K. (2004). The Toyota Way: 14 Management Principles from the World's Greatest Manufacturer.

An advanced planning system (APS) primarily differs from enterprise resources planning (ERP) by focusing on optimizing operations scheduling. Here's the detailed breakdown:

ERP Systems:

Functionality: ERP systems are integrated software platforms used to manage the day-to-day operations of a business, including finance, HR, manufacturing, supply chain, services, procurement, and others.

Action Translation: ERP systems are designed to ensure that plans and schedules created are executed across various business functions.

APS Systems:

Functionality: APS systems are specialized software tools designed to enhance the planning and scheduling capabilities of an ERP system. They are used for detailed planning and optimizing operations, focusing on efficiency and resource utilization.

Optimization: APS uses advanced algorithms and mathematical models to optimize production schedules, taking into account constraints such as capacity, lead times, and material availability.

Primary Difference: While ERP systems provide a broad operational management platform, APS systems concentrate on improving the efficiency of specific scheduling and planning processes through optimization techniques.

Stadtler, H., & Kilger, C. (2005). Supply Chain Management and Advanced Planning: Concepts, Models, Software, and Case Studies.

Vollmann, T. E., Berry, W. L., Whybark, D. C., & Jacobs, F. R. (2005). Manufacturing Planning and Control for Supply Chain Management.

The condition most indicative of a company that is effectively managing its cash is low accounts receivable, low inventory, and high accounts payable. Here's why:

Accounts Receivable (AR):

Low AR: Indicates that the company is collecting its receivables quickly, which means cash inflows are efficient, reducing the days sales outstanding (DSO).

Inventory:

Low Inventory: Implies effective inventory management. The company is not tying up excessive cash in inventory, reducing carrying costs and minimizing obsolescence risks.

Accounts Payable (AP):

High AP: Suggests that the company is taking full advantage of credit terms provided by suppliers, delaying cash outflows and preserving cash within the business for a longer period.

By effectively managing these three areas, a company can ensure a positive cash flow, maintain liquidity, and enhance its overall financial health.

Brigham, E. F., & Houston, J. F. (2018). Fundamentals of Financial Management.

Ross, S. A., Westerfield, R. W., & Jordan, B. D. (2016). Corporate Finance: Core Principles and Applications.

The metric most appropriate for determining the time required to convert a dollar spent on materials into a dollar received in sales is the cash-to-cash cycle time. Here's the explanation:

Definition: Cash-to-cash cycle time (C2C) is a key performance indicator that measures the time taken between outlaying cash for raw material and receiving cash from product sales. It reflects the efficiency of a company's cash conversion process.

Components of C2C:

Days Inventory Outstanding (DIO): The average number of days that inventory is held before it is sold.

Days Sales Outstanding (DSO): The average number of days that receivables are outstanding before they are collected.

Days Payable Outstanding (DPO): The average number of days that the company takes to pay its suppliers.

Calculation:

Cash-to-CashCycleTime=DIO+DSODPOCash-to-CashCycleTime=DIO+DSODPO

Importance: This metric helps in understanding the liquidity and operational efficiency of the company. A shorter C2C indicates a more efficient operation, as it shows that the company can quickly convert its investments in inventory and other resources into cash flows.

Hopp, W. J., & Spearman, M. L. (2008). Factory Physics.

Stevenson, W. J. (2018). Operations Management.

An advanced planning and scheduling (APS) system is designed to enhance the efficiency and effectiveness of the production process. Its primary functions include:

Constraint Identification: APS systems are highly effective at identifying constraints within a facility, such as bottlenecks, capacity limits, and material shortages. By pinpointing these constraints, the system helps in planning and optimizing the use of available resources.

Production Optimization: They optimize scheduling by considering various constraints and ensuring that production schedules align with capacity and material availability.

Scenario Analysis: APS systems allow for the simulation of different production scenarios to determine the best course of action in response to changing conditions.

Real-Time Adjustments: They provide real-time data and feedback, enabling quick adjustments to production plans to address issues as they arise.

'Advanced Planning and Scheduling in Manufacturing and Supply Chain Management' by Hermann Meyr, Marc Salomon, and Carlo Veilleux

APICS, 'Advanced Planning and Scheduling Systems: An Overview'

Implementing manufacturing cells in a company that manufactures complex mechanical assemblies to customer order is likely to result in several operational efficiencies, the most significant being the reduction in the time to fill customer orders. This happens through:

Reduction in Lead Times: Manufacturing cells organize workstations and equipment based on the sequence of operations required for production, minimizing movement and handling time.

Improved Workflow: By grouping machines and processes, the workflow becomes more streamlined, reducing delays between steps in the production process.

Enhanced Flexibility: Manufacturing cells can quickly adapt to changes in production requirements, improving responsiveness to customer orders.

Decreased Work in Progress: With more efficient production flows, there is less work-in-progress (WIP), which translates to faster completion and shipment of finished products.

'Lean Thinking: Banish Waste and Create Wealth in Your Corporation' by James P. Womack and Daniel T. Jones

'The Cellular Manufacturing Advantage' by John Black

Coupling an enterprise resources planning (ERP) system with an advanced planning system (APS) is most appropriate for businesses with multiple plants in the same supply chain. This setup is beneficial because:

Integrated Planning: APS systems enhance the planning capabilities of ERP by optimizing production schedules, inventory levels, and distribution plans across multiple plants.

Visibility and Coordination: It provides greater visibility and coordination among plants, ensuring that resources are optimally allocated and that production plans are synchronized.

Demand Alignment: APS systems can better match production schedules to customer demand, reducing lead times and improving service levels.

Capacity Utilization: They optimize the utilization of capacity across multiple plants, ensuring that production is balanced and efficient.

'ERP and APS Systems for Manufacturing' by Gerald G. Brown and Eliot N. Weiss

APICS, 'Enterprise Resources Planning and Advanced Planning Systems Integration'

Coupling an enterprise resources planning (ERP) system with an advanced planning system (APS) is most appropriate for businesses with multiple plants in the same supply chain. This setup is beneficial because:

Integrated Planning: APS systems enhance the planning capabilities of ERP by optimizing production schedules, inventory levels, and distribution plans across multiple plants.

Visibility and Coordination: It provides greater visibility and coordination among plants, ensuring that resources are optimally allocated and that production plans are synchronized.

Demand Alignment: APS systems can better match production schedules to customer demand, reducing lead times and improving service levels.

Capacity Utilization: They optimize the utilization of capacity across multiple plants, ensuring that production is balanced and efficient.

'ERP and APS Systems for Manufacturing' by Gerald G. Brown and Eliot N. Weiss

APICS, 'Enterprise Resources Planning and Advanced Planning Systems Integration'

Drop shipping is a fulfillment method where retailers do not keep products in stock but instead transfer customer orders and shipment details directly to the supplier or manufacturer, who then ships the goods directly to the customer. Here's how it works step-by-step:

Customer Order: A customer places an order with the retailer.

Order Transfer: The retailer forwards the order and shipping details to the supplier or manufacturer.

Supplier Fulfillment: The supplier or manufacturer prepares the order and ships it directly to the customer.

Inventory Management: The retailer does not handle or store inventory, reducing warehousing and logistics costs.

Benefits: This method can reduce inventory holding costs, minimize handling time, and improve cash flow for the retailer, as they do not pay for inventory until it is sold.

Chopra, S., & Meindl, P. (2016). Supply Chain Management: Strategy, Planning, and Operation.

Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2013). Supply Chain Logistics Management.