CPIM Part 1 Missed Questions pt. 1

Which of the following is not a use for the bill of material? A Calculating capacity B Determining product cost C Planning D Engineering change management

A Calculating capacity

Bottlenecks determine a production facility's throughput. All except which of the following should be done to manage bottlenecks? A Change the schedule frequently B Increase bottleneck capacity C Control the bottleneck's material feed rate D Maintain an accurate time buffer to bottleneck operation

A Change the schedule frequently Hide Explanation Bottlenecks are what control production throughput. Changing the schedule frequently should be a last resort to meeting customer deliveries. Changes will reduce capacity at the bottleneck, causing the bottleneck condition to worsen. To manage bottlenecks, an organization should maintain an accurate time buffer to bottleneck operation, control the bottleneck's material feed rate, and increase bottleneck capacity.

Which of the following is a production planning method that maintains a stable production rate while varying inventory levels to meet demand? A Hybrid production method B Level production method C Chase production method D Subcontracting production method

B Level production method

Which of the following quality control tools would most likely be used to identify the problem that has the greatest economic impact? A Process flow diagram B Pareto diagram C Cause-and-effect diagram D Scatterplot diagram

B Pareto diagram

Process specifications are inputs to the manufacturing planning and control system and are generally recorded on which of the following? A Engineering drawing B Routing C Bill of material D Material requirements plan

B Routing Process specifications are inputs to the manufacturing planning and control system and are generally recorded on a routing. Process specifications can also be recorded in a routing file/route sheet. The product description is an input that can be located on the bill of material or an engineering drawing. The quantities required is an input that can be obtained from the material requirements plan.

The costs incurred during the process of making a product are known as which of the following? A Pocket price B Capital C Cost of goods sold D Expenses

C Cost of goods sold

If a work center's available time is 150 hours per work, its utilization is 90%, and its efficiency is 115%, what is its rated capacity? A 117.4 standard hours B 135 standard hours C 155.25 standard hours D 172.5 standard hours

Correct answer: 155.25 standard hours To determine rated capacity, use the following formula: Rated capacity = available time x utilization x efficiency Rated capacity = 150 x 0.90 x 1.15 Rated capacity = 155.25 standard hours

A company is paying $2.00 per mile for a product to be transported 500 miles. If the shipment weight is 50,000 pounds, what is the cost per hundredweight? A 1.5 B 2.5 C 1 D 2

Correct answer: 2 It is common to measure transportation costs on a per-weight basis. In this example, the per-weight basis is "hundredweight." To calculate the cost per hundredweight (cwt.), first, calculate the travel cost ($2.00 × 500 miles), which is $1,000. Then, divide the total cost for the truck by its hundredweight, 500 = 50,000 pounds divided by 100. 1,000 divided by 500 = 2.00/cwt.

Management determined that two stockouts a year were permitted for umbrellas. The annual demand for umbrellas is 25,000 units, they are ordered in quantities of 2,500, and the lead time standard deviation is 150 units with the lead time being one week. Using this information, what is the service level? A 100% B 75% C 80% D 90%

Correct answer: 80% To determine the service level, you must first determine the number of orders per year by dividing the annual demand by the order quantity. 25,000/2,500 = 10 orders per year. Next, you will need to determine how many times there must not be any stockouts during the year by subtracting the number of tolerable stockouts (2) by the number of orders per year (10): 10 orders per year - 2 tolerable stockouts = 8. Now, you can determine the service level by dividing the number of times there must not be any stockouts (8) by the number of orders per year (10): 8/10 = 0.8, or 80%.

our work center has 20 pieces of equipment that can be run in one week with five workdays over an eight-hour shift each day. The work center has 25 workers. Accounting for each worker's daily one-hour break, calculate the utilization. A 87.28% B 79.31% C 84.38% Hide Explanation D 81.25%

Correct answer: 84.38% First, you need to calculate the Available Time. Available Time = Equipment x Hours in Time Bucket Available Time = 20 x (5 days x 8 hours per day) Available Time = 800 hours per five-day workweek Next, calculate the total of break hours. Each of the 25 workers takes a one-hour break each day which accumulates to 125 hours per five-day workweek (25 x 5). Subtract 125 from 800 (Available Time) for a total of 675 (Hours Actually Worked). Finally, calculate the utilization. Utilization = Hours Actually Worked ÷ Available Time Utilization = 675 ÷ 800 Utilization = 0.84375 Utilization = 84.38%

What is the output of the production plan? A Aggregate plan B Detailed plan C Time-phased manufacturing and purchase orders D Material requirements plan Next Question

Correct answer: Aggregate plan The aggregate plan is the output of the production plan. The aggregate plan includes by-product groups and inventory levels. The detailed plan is the output of the master production schedule. The time-phased manufacturing and purchase orders are the output of the material requirements plan.

Which of the following is an advantage of back scheduling? A Back scheduling commits necessary resources as early as possible B Back scheduling levels the workload C Back scheduling avoids inventory buildup and cost D Back scheduling takes advantage of excess capacity

Correct answer: Back scheduling avoids inventory buildup and cost Back scheduling allows manufacturing to avoid committing resources until they are needed; therefore, avoiding inventory buildup and cost.

For planning purposes, it is helpful to understand the relationships and quantities of component parts to all parent parts. What process is used to help with this planning? A Single-level bill of material B Bill-of-material explosion C Planning bill of material D Indented bill of material

Correct answer: Bill-of-material explosion A bill-of-material explosion helps expose the relationships and quantity requirements of component parts across all parent parts. For example, if part one of part B goes into part A and two of part B goes into part C, and part C goes into part A, exploding the bill of material will show the relationship of part B to part A and C and the total part B requirement of 3. An indented bill of material is a way of displaying a multilevel bill of material. A planning bill of material is used to help with planning in an assemble-to-order environment. A single-level bill of material is a specific type of BOM.

The order n periods supply rule orders a fixed quantity for a given period of time. This approach is best used for which of the ABC classifications? A D B C C B D A

Correct answer: C The order n periods supply rule orders a fixed quantity for a given period of time and is best used for C category items. Ordering in n periods will result in fewer orders, a characteristic of controlling C items. D is not a traditional ABC category.

In the manufacturing planning and control (MPC) hierarchy, resource planning is part of which category? A Capacity planning activities Hide Explanation B Execution and control C Priority planning D Demand-side activities

Correct answer: Capacity planning activities In the manufacturing planning and control (MPC) hierarchy, resource planning is part of the capacity planning category. Demand-side activities include forecasting, demand management and distribution requirements planning (DRP). Priority planning includes sales and operations planning (S&OP), master scheduling, and material requirements planning (MRP). Execution and control include purchasing and production activity control.

Capacity management is a supply-side activity in the manufacturing planning and control (MPC) hierarchy and includes which of the following? A Material Requirements Planning (MRP) B Capacity planning and control C Forecasting and demand management D Sales & Operations Planning (S&OP)

Correct answer: Capacity planning and control Capacity management includes both capacity planning and capacity control. Forecasting and demand management are part of demand-side activities. Sales & Operations Planning (S&OP) and Material Requirements Planning (MRP) are part of priority planning.

In regard to price negotiations, what type of products are not generally negotiated but, instead, use competitive bidding? A Items with only a few suppliers B Category A items (from ABC classification) C Commodities and standard items Hide Explanation D Key components in an engineer to order environment

Correct answer: Commodities and standard items Commodities and standard items should be readily available from many suppliers. The focus on these product types should be low cost and ease of management. Items with only a few suppliers and key components in an engineer to order environment are generally considered "criticals" and are good candidates for negotiation with a supplier partner. Category A items (from ABC classification) will have tighter inventory management and may be candidates for negotiation.

In the manufacturing planning and control (MPC) hierarchy, distribution requirements planning (DRP) is a part of which category? A Priority planning B Capacity planning C Execution and control D Demand-side activities

Correct answer: Demand-side activities In the manufacturing planning and control (MPC) hierarchy, distribution requirements planning is a part of the demand-side activities category. Other demand-side activities include forecasting and demand management. Priority planning includes sales and operations planning (S&OP), master scheduling, and material requirements planning (MRP). Capacity planning activities include resource planning, rough-cut capacity planning (RCCP) and capacity requirements planning (CRP). Execution and control include purchasing and production activity control.

Companies will utilize a pegging report in order to do which of the following? A Determine capacity requirements for an assembly B Pinpoint demand for a component part C Determine the origin of demand for a component D Track the quantity needed to build a parent assembly

Correct answer: Determine the origin of demand for a component Pegging reports determine the origin of demand for a particular component. They will show only the parents for which demand exists, unlike the where-used report, which shows every parent in which a component is used. A pegging report does not determine capacity requirements for an assembly, track the quantity needed to build a parent assembly, or pinpoint demand for a component part.

Which of the following is not a basic supply chain flow that connects the supply chain entities together? A Primary flow of cash B Flow of information C Reverse flow of products returned D Flow of international supply

Correct answer: Flow of international supply Flow of international supply is not one of the four basic supply chain flows that connect the supply chain entities together. The four basic supply chain flows that connect the supply chain entities together are: Flow of information Primary flow of cash Reverse flow of products returned Primary product flow Of the four supply chain flows, three deal with the direct movement from the manufacturer to the customer; they are the flows of information, cash, and materials. The fourth flow, the flow of products returned, deals with customer returns, repairs, disposal, and recycling.

Implementing Lean and Six Sigma will help a company by: A Reducing the total amount of time to implement the projects separately B Reducing the amount of variance in a process C Reducing the amount of waste in a process D Focusing on both solving problems and improving processes

Correct answer: Focusing on both solving problems and improving processes Implementing Lean and Six Sigma will help a company by focusing on both solving problems and improving processes. Reducing implementation time is not a key benefit to the company. Reducing the amount of waste in a process is the focus of Lean. Reducing the amount of variance in a process is the focus of Six Sigma.

Open-loop material requirements planning assumes which of the following? A Finite capacity B Downstream throughput C Infinite capacity D Space constraints

Correct answer: Infinite capacity Open-loop material requirements planning assumes infinite capacity to help simulate potential results if capacity could be increased.

Which type of manufacturing focuses on producing products that vary in design, process, and order quantities? A Standard manufacturing B Project manufacturing C Flow manufacturing D Intermittent manufacturing

Correct answer: Intermittent manufacturing Intermittent manufacturing, or jobbing, focuses on producing products that vary in design, process, and order quantities. Flow manufacturing focuses on producing high-volume standard products. Project manufacturing focuses on producing one complex unit such as a ship or a building. Standard manufacturing is not a type of manufacturing used during production activity control.

During the planning horizon of the master production schedule, companies establish zones to help with the decision-making process. Changes can be easily made during which zone? A Slushy zone B Frozen zone C Liquid zone D Planning zone

Correct answer: Liquid zone Changes can be easily made during the liquid zone. The liquid zone allows the planner to make any type of change to the master production schedule. The slushy zone does allow changes to be made; however, any changes made in this zone require negotiations or trade-offs. The frozen zone does not allow changes without approval of senior management, as materials and capacity are already committed. The planning zone is not an established zone used during the planning horizon of the master production schedule.

As companies evolve, they begin to bring together once siloed processes of obtaining, producing and delivering materials into a unified role. What is this unified role? A Make-to-stock B Supply chain management C Logistics D Just-in-time

Correct answer: Logistics Logistics is a subcomponent of supply chain management focused on obtaining, producing, and delivering materials. Just-in-time is a lean management philosophy and make-to-stock is a type of production environment.

What two tools are available to planners to help exercise control? A Resource planning and master scheduling B Maintaining priorities and replanning C Forecasting and demand management D Six Sigma and kaizen

Correct answer: Maintaining priorities and replanning When a planner is responsible for ensuring materials are completed on schedule, they can maintain priorities and replan as needed and exceptions occur. Maintaining priorities involves expediting or de-expediting while keeping original due dates. Replanning involves determining new net requirements when expediting will not work. Forecasting, demand management, resource planning, and master scheduling are higher-level activities occurring before orders are released. Six Sigma and kaizen are quality and lean tools.

The planned build schedule for manufacturing is best known as which of the following? A Master production schedule B Material requirements plan C Strategic plan D Production plan

Correct answer: Master production schedule The master production schedule is the planned build schedule for manufacturing. The material requirements plan determines material requirements and updates priorities. The production plan is the monthly aggregate plan into which the MPS rolls. The strategic plan identifies long-term goals and objectives.

Every aspect of the bill of material is planned by which of the following? A Material requirements planning system B Master production schedule C Production plan D Inventory plan

Correct answer: Material requirements planning system Every aspect of the bill of material is planned by the material requirements planning system. The bill of material is used for product definition, engineering change control, service parts, planning, order entry, manufacturing, and costing.

What is the main advantage of zone storage? A Easy put-away/picking B Misplaced items may be easier to find C Maximize cube utilization D Minimal record keeping

Correct answer: Misplaced items may be easier to find Using zone storage, it may be easier to find misplaced items if only the zone needs to be searched. Minimal record keeping and easy put-away/picking are advantages of fixed-location storage. Maximize cube utilization is an advantage of random-location storage.

demand of a company product? A Naïve forecasting B Qualitative forecasting C Econometric forecasting D Predicated forecasting

Correct answer: Naïve forecasting Internal historical data used to forecast product demand is considered to be a naïve forecasting technique. It is based on the assumption that historical patterns can predict future patterns. Econometric forecasting uses external indicators to forecast product demand. Qualitative forecasting uses intuition to forecast product demand. Predicated forecasting is not one of the forecasting techniques used.

Production activity is controlled by input and output control. What is the input rate controlled by? A Orders released to the shop floor Hide Explanation B Increases in work center capacity C Decreases in work center capacity D Orders released for shipment

Correct answer: Orders released to the shop floor The input rate is controlled by orders released to the shop floor. When the input rate is increased, lead times, work-in-process times, and queue times are also increased. The output rate is controlled by increases and decreases in work center capacity. Neither input nor output rates are controlled by orders released for shipment.

Specification limits and control limits are key parts of control charts and measurement. What is a specification limit? A Parameters set by the customer to define if the product is in/out of customer tolerances B Constraints defined by the company dictating to the customer what is possible C Parameters set by statistical observations to define if a process is in/out of tolerance D The maximum amount a company can change the price of a product according to the contract

Correct answer: Parameters set by the customer to define if the product is in/out of customer tolerances Specification limits are parameters set by the customer to define if the product is in/out of customer tolerances. This is also referred to as the "voice of the customer." Specification limits are set by customer expectations. Control limits are parameters set by statistical observations to define if a process is in/out of tolerance, whatever the tolerance is. Control limits are also referred to as the "voice of the process" and determine if a process or machine can stay within compliance parameters. The primary difference, specification limits are product-centric; does the product conform to customer expectations, while control limits are process-centric; can the defined processes deliver consistent and repeatable results.

Which of the following is not a valid reason for utilizing anticipation inventory? A Trade boycotts B Vacation shutdown C Price discounts D Peak season demand

Correct answer: Price discounts Inventory accumulated due to price discounts would be considered lot size inventory. Anticipation inventory is accumulated in anticipation of future demand such as peak season demands, vacation shutdowns, and trade boycotts.

Waste reduction is a goal of lean manufacturing because the reduction of wastes can help enable companies to stay profitable during economic downturns. Shigeo Shingo identified "The Seven Wastes." Which of the following is not one of Shingo's seven wastes? A Excess movement B Waiting C Transportation D Production

Correct answer: Production Production is not one of Shingo's seven wastes. Production is needed for products to be made; however, overproducing those products does cause waste. Shingo's seven wastes include overproducing, waiting, transportation, over-processing, excess inventory, excess movement, and scrap and rework. The reduction of wastes can result in lower costs, better quality, shorter lead times, and greater competitiveness.

Demand management oversees the demands for products in the short, medium, and long-term. Which of the following identifies the need for demand management in the medium term? A Master production scheduling B Strategic business planning C Sales and operation planning D Production planning

Correct answer: Production planning Demand management is needed in the medium term for production planning and projecting aggregate demand. Demand management is needed in the short term for master production scheduling and the items needed. Demand management is needed in the long term for strategic business planning, which includes facilities. Sales and operation planning is the act of revising the strategic business plan and is not directly related to the need for demand management in the short, medium, or long term.

Which of the following does the balance sheet does not contain? A Owner's equity B Liabilities C Assets D Revenue

Correct answer: Revenue Revenue is not on the balance sheet, as it is listed on the income statement. The balance sheet contains an organization's assets, liabilities, and owner's equity. The assets are generally listed on the left-hand side of the balance sheet, and the liabilities and owner's equity are generally listed on the right-hand side of the balance sheet.

If there is only one supplier available due to a patent, what type of sourcing is utilized? A Single sourcing B Exclusive sourcing C Multiple sourcing D Sole sourcing

Correct answer: Sole sourcing Sole sourcing is utilized when there is only one supplier available due to a patent. Sole sourcing also occurs when only one supplier has the raw materials, technical specifications, or needed location. Single sourcing occurs when a buyer utilizes one source even though there are multiple sources available. Multiple sourcing occurs when a buyer utilizes multiple sources for an item. Exclusive sourcing is not a type of sourcing.

A company's available capacity can best be described as which of the following? A The number of hours that can be used by a work center B The amount of resource needed to produce output for a certain length of time C The amount of dispatched orders to a work center or facility in a given period of time D The ability of a resource to produce a quantity of output for a particular period

Correct answer: The ability of a resource to produce a quantity of output for a particular period The APICS Dictionary 16th Edition defines available capacity as "the capability of a system or resource to produce a quantity of output in a particular time period." The amount of resource needed to produce output for a certain length of time is the required capacity. The number of hours that can be used by a work center is the available time. The amount of released work to a facility during a specified time period is the load.

The central tendency of the distribution of a bell curve is which of the following? A The average value B The mean absolute deviation C The standard deviation D The dispersion

Correct answer: The average value The central tendency of the distribution of a bell curve is the average value. The average value, also known as the mean value, is the highest point of the bell curve. The symbol used to represent the average or mean value is x bar. The dispersion is the variation of actual demands. The standard deviation is the statistical value that identifies how close the cluster of values is to the average. The mean absolute deviation is used to measure the forecast error.

A firm planned order is primarily used for what purpose? A To convert a planned order to a scheduled receipt B To freeze the planned order against changes in quantity and time C To calculate the required inventory balance D To change the data and quantity of the customer order

Correct answer: To freeze the planned order against changes in quantity and time When material shortages or capacity problems arise, planners may opt to freeze the planned order against changes in quantity in and time. Doing so results in a firm planned order.

Which of the following is a reason an organization may purchase hedge inventory? A To capitalize on quantity discounts B To protect against surge demand C To lock in low market prices D To claim extended supplier warranties

Correct answer: To lock in low market prices Hedge inventory planning involves speculation related to an event that may or may not happen, such as a price increase, labor strike, etc. Companies will watch for commodities traded in open markets to drop in price. Once prices fall, the company will lock in low market prices and buy enough inventory to satisfy their target customer service level. Reference:

Which of the following identifies a reason an organization would make a product in-house? A To concentrate on its area of specialization B To provide competitive pricing C To maintain specialized knowledge D To use less capital investment

Correct answer: To maintain specialized knowledge An organization would decide to make a product in-house in order to maintain the specialized knowledge required to design/produce the product. Other reasons companies decide to make products in-house are to utilize existing equipment, to produce the product cheaper than another supplier, to keep their process confidential, and to maintain the product's quality. To use less capital investment, to provide competitive pricing, and to concentrate on its area of specialization are all reasons a company would choose to buy products from other suppliers.

When using ABC inventory control, relative importance is used to categorize parts. Which of the following is not a criteria for determining part relative importance? A Inventory turns B Replenishment lead time C Variable contribution D Shelf life

Correct answer: Variable contribution When using ABC inventory control, A items typically include parts with high annual dollar usage or parts with high relative importance. High relative importance could include parts with a short shelf lift that may expire before used, parts with longer than normal replenishment lead times from suppliers, or production and parts with high turnover (high usage). Variable contribution is a financial metric important to measuring profitability, but is not used in ABC inventory control.

The supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. What type of inventory management is this an example of? A Vendor-managed inventory B Decoupling inventory C Anticipation inventory D Distribution inventory

Correct answer: Vendor-managed inventory Vendor-managed inventory (VMI) is a means of optimizing supply chain performance in which the supplier has access to the customer's inventory data and is responsible for maintaining the inventory level required by the customer. Resupply is performed by the vendor through regularly scheduled reviews of the on-site inventory. Inventory is counted, damaged or outdated goods removed, and restocked to predetermined levels. The vendor obtains a receipt for the restocked inventory and invoices the customer accordingly.

Production plans feature all except which of the following? A Shipment plans B Product groupings C Inventory plans D Weekly production

Correct answer: Weekly production The production plan is a statement of shipments, production, and inventory/backlog, broken down by product families or groups. The master production schedule (MPS) covers weekly end-item production.

When do tracking signals demonstrate a positive forecasting bias? A When they are less than one B When they are equal to one C When they are equal to zero D When they are consistently under-forecasting against actual

Correct answer: When they are consistently under-forecasting against actual Tracking signals measure forecasting quality, specifically the sum of errors against a deviation measure such as mean absolute deviation (MAD). They are a quality indicator and help determine if the forecast needs adjustment. The formula for calculating the tracking signal is as follows (using the information on deviations and MADs from the 3-quarter moving average forecast): Tracking signal = Algebraic Sum of Forecast Deviations / MAD = -80 / 28 = -2.83 If the deviations divided by the MAD are greater than one, the forecast is exhibiting positive bias. Negative bias would be present if the deviations are less than one, equal to one, or equal to zero.

The annual demand for umbrellas is 26,000 units, ordered in quantities of 2,600. With a one-week lead time and safety stock of 125 units, what is the order point, assuming consistent demand? A 10 B 2,600 C 225 D 625

D 625 Order point = Demand during lead time + Safety stock Given lead time is 1 week, demand during lead time will be the demand for one week = 26,000 / 52 = 500 (52 weeks per year), assuming consistent weekly demand. Given safety stock level = 125 Order point = 500 + 125 Order point = 625

The delivery lead time in an engineer-to-order (ETO) environment includes time for which of the following? A Shipping B Assembling and shipping C Manufacturing, assembling, and shipping D Designing, purchasing, manufacturing, assembling, and shipping

D Designing, purchasing, manufacturing, assembling, and shipping

In regard to using rail as a mode of transportation, which of the following statements is false? A Rail transportation is cheaper than road transportation B Railways are generally reliable and good for long distances C Railways are best suited for transporting bulky goods D Most of the operating costs of a railway are variable

D Most of the operating costs of a railway are variable

What should be the minimum possible planning horizon for the master production schedule? A Equal to the longest cumulative lead time B Equal to the shortest component lead time C Twice the time needed to add surge capacity D Six months after rough cut capacity planning

Equal to the longest cumulative lead time