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APICS Certified in Planning and Inventory Management(Part 2) Sample Questions (Q16-Q21):

NEW QUESTION # 16
A firm produces a moderate variety of products to stock in a single plant. The plant is organized in a functional layout withsome work cells. Which of the following indicators most appropriately would be used to evaluate the effectiveness of thedetailed capacity planning processes?

A. Change in level of work-in-process (WIP) inventory
B. Percentage of master schedule attained
C. Units of output per direct labor hour
D. Level of finished goods inventory

Answer: A

Explanation:
Explanation
The change in level of work-in-process (WIP) inventory is the most appropriate indicator to evaluate the effectiveness of the detailed capacity planning processes for a firm that produces a moderate variety of products to stock in a single plant. Detailed capacity planning is the process of determining the quantity and timing of resources, such as labor, equipment, and materials, needed to execute the master production schedule (MPS) at the work center level1. The MPS is a plan that specifies the quantity and timing of end items to be produced in a given time period2. The change in level of WIP inventory is a measure of the difference between the amount of WIP inventory at the beginning and at the end of a period3. WIP inventory consists of partially completed products or components that are waiting for further processing or assembly.
The change in level of WIP inventory can indicate how well the detailed capacity planning processes are aligned with the MPS and the actual demand. A positive change in WIP inventory means that more products or components are being produced than consumed, which implies that there is excess capacity or insufficient demand. A negative change in WIP inventory means that more products or components are being consumed than produced, which implies that there is insufficient capacity or excess demand. A zero or minimal change in WIP inventory means that the production and consumption rates are balanced, which implies that there is optimal capacity and demand. Therefore, by monitoring the change in level of WIP inventory, the firm can evaluate whether its detailed capacity planning processes are effective in meeting customer needs and expectations, as well as minimizing inventory costs and maximizing resource utilization.
The other options are not as appropriate indicators to evaluate the effectiveness of the detailed capacity planning processes for a firm that produces a moderate variety of products to stock in a single plant. Units of output per direct labor hour is a measure of labor productivity, which indicates how efficiently labor is used to produce output. However, labor productivity does not reflect the effectiveness of detailed capacity planning processes, because it does not account for other factors that affect production, such as equipment, materials, quality, or demand. Percentage of master schedule attained is a measure of schedule performance, which indicates how well the actual production matches the planned production. However, schedule performance does not reflect the effectiveness of detailed capacity planning processes, because it does not account for other factors that affect production, such as capacity constraints, resource availability, or customer satisfaction.
Level of finished goods inventory is a measure of inventory management, which indicates how much inventory is available to meet customer orders. However, finished goods inventory does not reflectthe effectiveness of detailed capacity planning processes, because it does not account for other factors that affect production, such as product variety, lead time, or quality.
References: Detail Capacity Planning - Capacity Planning - Gaebler.com Resources ...; Master Production Schedule (MPS) Definition | Operations & Supply Chain Dictionary; Work-in-Process Inventory: Definition & Example - Video & Lesson Transcript | Study.com; [Work-in-Process (WIP) Definition - Investopedia];
[Labor Productivity Definition - Investopedia]; [Labor Productivity: Definition & Statistics - Video & Lesson Transcript | Study.com]; [Schedule Performance Index (SPI) Definition - Investopedia]; [Schedule Performance Index (SPI) & Cost Performance Index (CPI) in Project Cost Management]; [Finished Goods Inventory: Definition & Formula - Video & Lesson Transcript | Study.com]; [Finished Goods Inventory:
Definition & Example - Video & Lesson Transcript | Study.com].

NEW QUESTION # 17
If all other factors remain the same, when finished goods inventory investment is increased, service levels typically will:

A. increase in direct (linear) proportion.
B. increase at a decreasing rate.
C. remain the same.
D. increase at an increasing rate.

Answer: B

Explanation:
Explanation
Finished goods inventory is a type of inventory that consists of the final products that are ready for sale to the customers. Finished goods inventory investment is the value of the finished goods inventory held by the company. Service level is a measure of customer satisfaction that indicates the percentage of customer orders that can be fulfilled from the available inventory. Service level typically will increase when finished goods inventory investment is increased, because more inventory means more ability to meet the customer demand.
However, the relationship between service level and finished goods inventory investment is not linear, but rather asymptotic. This means that service level will increase at a decreasing rate as finished goods inventory investment increases. In other words, the marginal benefit of increasing finished goods inventory investment will diminish as the service level approaches 100%. This is because there is a limit to how much inventory can improve the service level, and beyond a certain point, the additional inventory will not have a significant impact on customer satisfaction.
References: CPIM Exam Content Manual Version 7.0, Domain 5: Plan and Manage Inventory, Section 5.1:
Develop Inventory Plans, Subsection 5.1.2: Describe how to develop an inventory policy (page 44).

NEW QUESTION # 18
A company has deployed its own proprietary software for web hosting and order management. This software has beenrecognized as best-in-class. The proprietary software represents what defensive operational strategy used to sustain thecompany's business over time?

A. Difficult to relocate
B. Scarcity
C. Difficult to copy
D. Difficult to substitute

Answer: C

Explanation:
Explanation
Difficult to copy is a defensive operational strategy used to sustain the company's business over time by creating a unique product or service that is hard for competitors to imitate. The proprietary software for web hosting and order management represents this strategy, as it has been recognized as best-in-class and may have some features or functions that are not easily replicated by others. Difficult to substitute is a defensive operational strategy that creates a product or service that has no close substitutes in the market, making it more valuable and desirable for customers. Difficult to relocate is a defensive operational strategy that locates the production or service facilities in a place that has some advantages or benefits that are not available elsewhere, such as low labor costs, favorable tax policies, or access to natural resources. Scarcity is a defensive operational strategy that creates a product or service that has limited supply or availability, making it more exclusive and attractive for customers. References: CPIM Exam Content Manual Version 7.0, Domain 8:
Manage Quality, Continuous Improvement, and Technology, Section 8.1: Quality Concepts, p. 44; Defensive Strategy; Competitive Advantage.

NEW QUESTION # 19
Establishment of goals and baselines prior to entering the plan-do-check-act (FDCA) cycle allows improvement teams to:

A. determine if improvement potential is complete.
B. determine whether an effective change was made in the process.
C. complete the project with fewer iterations.
D. assure successful completion of the improvement effort.

Answer: B

Explanation:
Explanation
Establishment of goals and baselines prior to entering the plan-do-check-act (PDCA) cycle allows improvement teams to determine whether an effective change was made in the process. Goals are the desired outcomes or targets that the improvement teams want to achieve by implementing changes in the process1. Baselines are the current or initial performance levels of the process beforeimplementing any changes2. By establishing goals and baselines, improvement teams can have a clear direction and a reference point for their improvement efforts.
In the PDCA cycle, improvement teams follow four steps: plan, do, check, and act. In the plan step, they define the problem, analyze the root cause, and propose countermeasures. In the do step, they test the countermeasures on a small scale. In the check step, they measure and evaluate the results of the test and compare them with the goals and baselines. In the act step, they standardize and sustain the successful countermeasures or revise and repeat the cycle if needed3.
By comparing the results with the goals and baselines in the check step, improvement teams can determine whether an effective change was made in the process. An effective change is one that improves the performance of the process and meets or exceeds the goals set by the improvement teams4. If the results show that an effective change was made, improvement teams can move to the act step and implement the change on a larger scale. If not, improvement teams can go back to the plan step and identify new or revised countermeasures5.
Therefore, establishment of goals and baselines prior to entering the PDCA cycle allows improvement teams to determine whether an effective change was made in the process.
References: 1: Goal Setting Definition 1 2: Baseline Definition 2 3: What is an A33 4: How to Use an A3 Report for Problem Solving 4 5: The A3 Problem Solving Method

NEW QUESTION # 20
Which of the following activities will enhance a successful suppliercustomer lean relationship?

A. Returnable containers are used for material transport.
B. Communication between the counterparts at the two companies is studied and improved.
C. The supplier offers quantity discounts on material purchased.
D. Consignment inventories are maintained in anticipation of customer need.

Answer: B

Explanation:
Explanation
A lean relationship is a type of supplier-customer relationship that focuses on eliminating waste, improving quality, and reducing costs throughout the supply chain. A lean relationship requires a high level of collaboration, trust, and transparency between the supplier and the customer. Communication between the counterparts at the two companies is an essential activity that will enhance a successful lean relationship.
Communication can help to align the goals, expectations, and performance measures of the supplier and the customer, as well as to identify and resolve any issues or problems that may arise. Communication can also facilitate information sharing, feedback, and continuous improvement initiatives. References: CPIM Exam Content Manual Version 7.0, Domain 7: Plan and Manage Distribution, Section 7.1: Develop Distribution Plans, Subsection 7.1.3: Describe how to develop supplier-customer relationships (page 66).

NEW QUESTION # 21
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