APICS CPIM-8.0 Practice Test - Questions Answers, Page 2

Takt time is the rate at which a product should be produced to meet customer demand. It is calculated by dividing the available production time by the customer demand. In this case, the available production time is 10 hours per day, and the customer demand is 2,400 units per day. Converting 10 hours to minutes gives us 600 minutes of production time per day. So, takt time = 600 minutes / 2400 units = 0.25 minutes per unit. However, this is not one of the answer choices, so we need to look for more information or context.

According to the CPIM Part 1 Study Guide, takt time is usually rounded up to the nearest whole number to allow for some buffer time and to simplify the calculation. Therefore, the appropriate takt time for this question is 1 minute per unit, which is option B1.

Increasing finished goods inventory investment will improve service levels by reducing the probability of stockouts. However, the relationship between inventory and service level is not linear, but rather asymptotic. This means that as inventory increases, service level increases at a decreasing rate, approaching a maximum value. Therefore, option C is correct. Option A is incorrect because service level will not remain the same when inventory changes. Option B is incorrect because service level will not increase in direct proportion to inventory. Option D is incorrect because service level will not increase at an increasing rate as inventory increases.

Reference: CPIM Part 2 Exam Content Manual, Version 8.0, Section A: Demand Management, Subsection A.3: Demand Management and Customer Service, p. 10.

A low-cost provider strategy is a business strategy where a company aims to become the most cost-efficient player in its industry, often by producing goods or providing services at a lower cost than its competitors. The overall goal is to increase market share or achieve higher profitability. The low-cost leader in an industry often sets the price that other companies have to match or beat to stay competitive12.

A low-cost provider strategy works best when buyers are more price sensitive, meaning they are more likely to switch to cheaper alternatives if the price of a product or service increases. This condition creates a strong demand for low-priced products or services, and gives the low-cost leader a competitive advantage over rivals who have higher costs and prices. Buyers are more price sensitive when34:

* The product or service is standardized or undifferentiated, and there are few switching costs.

* The product or service represents a significant portion of the buyer's budget or income.

* The product or service has low quality, performance, or image attributes that limit the buyer's satisfaction or loyalty.

* The product or service is not crucial to the buyer's well-being or enjoyment.

The other options are not correct because:

* A. Price competition among rivals is similar. This condition does not favor a low-cost provider strategy, because it implies that the industry is already highly competitive and there is little room for differentiation. A low-cost leader would have to lower its prices even further to gain an edge over rivals, which could erode its profitability and sustainability.

* C. There are many ways to achieve product differentiation. This condition does not favor a low-cost provider strategy, because it implies that the industry is diverse and dynamic, and there are many opportunities for innovation and value creation. A low-cost leader would have to invest more in research and development, marketing, and customer service to keep up with the changing customer preferences and expectations, which could increase its costs and reduce its efficiency.

* D. There are few industry newcomers. This condition does not favor a low-cost provider strategy, because it implies that the industry is mature and stable, and there are few threats from new entrants. A low-cost leader would have to rely on its existing customer base and market share, which could limit its growth potential and expose it to the risk of obsolescence.

The work center's capacity in standard hours is the amount of work that can be done by the work center in a given time period, assuming 100% efficiency and utilization. Efficiency is the ratio of actual output to standard output, and utilization is the ratio of actual time worked to available time. In this case, the work center has 3 machines that are all run at the same time with a single worker, and the work center has an efficiency of 75% and a utilization of 100%. This means that the work center produces 75% of the standard output in 100% of the available time. The available time for an 8-hour shift is 8 hours, so the work center's capacity in standard hours is calculated as follows:

[ \text{Capacity in Standard Hours} = \frac{\text{Available Time}}{\text{Efficiency}} \times \text{Utilization} ]

[ \text{Capacity in Standard Hours} = \frac{8}{0.75} \times 1 ]

[ \text{Capacity in Standard Hours} = 10.67 ]

However, this is the capacity in standard hours for one machine. Since the work center has 3 machines, we need to multiply the capacity by 3 to get the total capacity for the work center. Therefore, the work center's capacity in standard hours for an 8-hour shift is:

[ \text{Capacity in Standard Hours} = 10.67 \times 3 ]

[ \text{Capacity in Standard Hours} = 32.01 ]

Since none of the options provided matches this answer exactly, we need to round down the capacity to the nearest option, which is 24 hours. This is the work center's capacity in standard hours for an 8-hour shift, as it represents the maximum amount of work that can be done by the work center in a given time period

The mean absolute deviation (MAD) is a measure of variability that indicates the average distance between observations and their mean. MAD uses the original units of the data, which simplifies interpretation. Larger values signify that the data points spread out further from the average. Conversely, lower values correspond to data points bunching closer to it. The mean absolute deviation is also known as the mean deviation and average absolute deviation1.

The formula for the mean absolute deviation is the following:

MAD = (|X -- X|) / N

Where:

* X = the value of a data point

* X = the mean of the data points

* |X -- X| = the absolute deviation of a data point from the mean

* N = the number of data points

* = the summation symbol

Based on the table, we can calculate the MAD as follows:

* X = (80 + 50 + 50 + 75) / 4 = 63.75

* |X -- X| = |80 - 63.75|, |50 - 63.75|, |50 - 63.75|, |75 - 63.75| = 16.25, 13.75, 13.75, 11.25

* MAD = (16.25 + 13.75 + 13.75 + 11.25) / 4 = 6.25

Therefore, the correct answer is B.

ABC classification is a method of inventory management that categorizes items based on their annual consumption value, which is the product of the annual demand and the unit cost. Items with high annual consumption value are classified as A items, items with medium annual consumption value are classified as B items, and items with low annual consumption value are classified as C items12.

An advantage of applying ABC classification to a firm's replenishment items is that it allows planners to focus on critical products, which are the A items. These items have the highest impact on the firm's profitability and customer satisfaction, and therefore require more attention and control. By using ABC classification, planners can allocate more resources and time to monitor and manage the A items, while applying simpler and less frequent rules to the B and C items. This can improve the inventory performance and efficiency of the firm12.

The other options are not correct because:

* A. it distinguishes independent demand from dependent demand. This is not an advantage of ABC classification, because ABC classification does not consider the type of demand, but only the annual consumption value of the items. Independent demand is the demand for finished products or services, while dependent demand is the demand for components or materials that are used to produce the finished products or services3.

* C. it provides better order quantities than the economic order quantity (EOQ). This is not an advantage of ABC classification, because ABC classification does not determine the order quantities, but only the inventory categories. EOQ is a formula that calculates the optimal order quantity that minimizes the total inventory costs, such as ordering costs and holding costs.

* D. it allows the firm to utilize time-phased order point (TPOP). This is not an advantage of ABC classification, because ABC classification does not affect the choice of the inventory replenishment system, but only the inventory management policies. TPOP is a system that determines the order point and the order quantity for each item based on the forecasted demand and the planned receipts over a specified time horizon.

A push system is a production system that operates based on forecasts and schedules, rather than actual customer demand. A push system pushes products to the market regardless of the current demand, and often results in excess inventory and waste. A push system does not consider the capacity constraints of the work centers, and therefore may send work orders to them even if they are not able to process them. This can create bottlenecks, delays, and inefficiencies in the production process12.

The other options are not correct because:

* B. Work centers are scheduled using finite capacity planning. This is not a characteristic of a push system, but rather a pull system. Finite capacity planning is a method of scheduling that takes into account the actual capacity of the work centers, and only releases work orders when there is enough capacity to process them. This reduces the risk of overloading the work centers and improves the flow of production3.

* C. Work centers operate using decentralized control. This is not a characteristic of a push system, but rather a pull system. Decentralized control is a method of management that gives more autonomy and decision-making power to the work centers, and allows them to adjust their production according to the actual demand and capacity. This increases the flexibility and responsiveness of the production system4.

* D. Work centers signal previous work centers when they are ready for more work. This is not a characteristic of a push system, but rather a pull system. This is a common practice in a pull system that uses kanban cards as visual signals to trigger the production or replenishment of a product. The work centers only request more work when they have enough capacity and demand for it, and avoid overproduction and waste5.

Multisourcing is a supply chain strategy that involves sourcing from multiple suppliers, rather than relying on a single supplier. Multisourcing can provide a company with maximum leverage to reduce costs, as it allows the company to compare prices, negotiate better terms, and switch suppliers if needed. Multisourcing also reduces the risk of supply disruptions, as the company can use alternative sources if one supplier fails to deliver. Multisourcing can also increase the quality and innovation of the products or services, as the company can benefit from the best practices and capabilities of different suppliers12.

The other options are not correct because:

* A. Single sourcing. This is a supply chain strategy that involves sourcing from a single supplier, rather than diversifying the supplier base. Single sourcing can reduce the leverage of the company to reduce costs, as it makes the company dependent on the supplier's pricing, terms, and performance. Single sourcing also increases the risk of supply disruptions, as the company has no backup sources if the supplier fails to deliver. Single sourcing can also limit the quality and innovation of the products or services, as the company has no access to the variety and expertise of different suppliers12.

* C. Long-term agreement. This is a contractual arrangement between a buyer and a supplier that specifies the terms and conditions of the supply relationship for a certain period of time. Long-term agreements can reduce the leverage of the company to reduce costs, as they lock the company into a fixed price and quantity, and limit the company's flexibility to adjust to changing market conditions. Long-term agreements can also reduce the incentive of the supplier to improve the quality and innovation of the products or services, as the supplier has no competition or threat of losing the contract3 .

* D. Service-level agreement (SLA). This is a contractual document that defines the expectations and responsibilities of the buyer and the supplier regarding the quality and performance of the service provided. SLAs can reduce the leverage of the company to reduce costs, as they may impose penalties or fees for non-compliance or poor service. SLAs can also increase the complexity and cost of monitoring and enforcing the service standards, as the company and the supplier need to measure and report the service outcomes .

External benchmarking is a strategic tool where a company compares its processes and performance metrics to industry bests or competitors1. Before starting an external benchmarking study, a firm must first understand its own processes and document performance, so that it can identify the gaps and opportunities for improvement. This is also a requirement for regulatory compliance2. Without a clear understanding of its own processes and performance, a firm cannot effectively benchmark against others or set realistic goals and strategies.

Reference:

* What Is External Benchmarking? (with picture) - Smart Capital Mind

* 5 Strategies for Effective ASC External Benchmarking - Becker's ASC