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Quiz Session - Attempts With Random Questions

APICS CPIM Exam Questions

Page 6 of 80

101.

When setting performance targets, the organization needs to ensure that the targets and measurements are all EXCEPT which of the following?

  • Budget neutral

  • Specific

  • Measurable

  • Attainable

Correct answer: Budget neutral

Budget neutral is not a key factor when determining the targets and measurements used when setting performance targets.

The main objective in setting performance targets is for an organization to obtain the needed results from a group or person. To meet the objective, the organization needs to ensure that the targets and measurements are SMART; in other words, Specific, Measurable, Attainable, Relevant, and Timebound.

102.

A company wishes to source materials outside its country. All the following are potential challenges that might be encountered by the company EXCEPT:

  • Quality consistency

  • Longer lead times and transportation costs

  • Currency fluctuation

  • Cultural conflicts

Correct answer: Quality consistency

Quality consistency should not be impacted when sourcing outside the country if processes and procedures are set up and managed.

Global sourcing is a more complex process and involves dealing with potential challenges in language and time zone differences, transportation cost and lead times, currency fluctuations, relationship management, and cultural conflicts.

103.

How does capacity management help manage costs?

  • Identifying and addressing resource constraints early is more cost-effective

  • Grouping purchases into a blanket purchase order reduces costs

  • Minimizing forecast error will reduce excess inventory costs

  • Identifying projected available balances helps drive the master production schedule

Correct answer: Identifying and addressing resource constraints early is more cost-effective

Capacity management helps identify and address resource constraints early, where it is more cost-effective to resolve them than later, when production resources may need to be realigned, causing more disruption.

Grouping purchases into a blanket purchase order and minimizing forecast error may reduce costs but are not part of capacity management. Identifying projected available balances that help drive the master production schedule is part of priority planning, not capacity management.

104.

Customer service starts with getting the product to the customer in acceptable condition, in the expected quantity, and on budget, all within the allotted time. What are these characteristics called?

  • Seven rights of customer service

  • Shingo's seven wastes

  • Seven basic tools of quality

  • Seven sigma

Correct answer: Seven rights of customer service

Customer service begins with getting the right product, to the right customer, at the right price, in the right quality, in the right quantity, to the right place, at the right time. This is also referred to as the seven rights of logistics or the perfect order.

Shingo's seven wastes is a lean/JIT concept to improve manufacturing and reduce inventory levels. Seven basic tools of quality are used in continuous improvement to help understand processes. Seven sigma is not an APICS term.

105.

Use the table provided to calculate the five-period moving average forecast (MAF):

   Month     
 56789101112
Sales25553275652555615628632555505754

  • 5763.6

  • 4708.8

  • 2555

  • An average of about 50% of the time

Correct answer: 5763.6

The most recent five periods are used to calculate the Moving Average Forecast (MAF), as this data is viewed as containing the most relevant demand trend. MAF is calculated by the following formula:

MAF = sum of period demand/number of periods

In this case, a five-period MAF has been requested. Therefore, the calculation is:

(5561+5628+6325+5550+5754)/5 = 5763.6

106.

Cash, inventory, and accounts receivables are generally liquid and can be used to help pay company obligations. Which ratio is an indicator of how effective these assets can be to cover company obligations?

  • Current ratio

  • Quick ratio

  • Critical ratio

  • Value perspective

Correct answer: Current ratio

The ASCM Supply Chain Dictionary defines current ratio as "current assets divided by current liabilities." The current ratio compares current assets (cash, inventory, accounts receivables) to current liabilities (accounts payables, short-term notes payable) and is an indicator of how effectively a company can pay short-term liabilities from existing assets.

The quick ratio is similar to the current ratio but excludes inventory as a current asset. Critical ratio is an execution dispatching rule not used in financial analysis. Value perspective is the perceived quality from the customer's viewpoint.

107.

The entire decision-making process, from problem recognition to action, has become so accelerated that it is simply impossible to rely on human response alone. What tool is now available to help in decision-making?

  • Decision Support Systems (DSS)

  • Business Intelligence (BI)

  • Business Decision Support (BDS)

  • Enterprise Relational Database (ERD)

Correct answer: Decision Support Systems (DSS)

Decision Support Systems (DSS) is a specific class of computer-based information systems that support decision-making activities. DSS analyzes business data and provides interactive information support to managers during the decision-making process from problem recognition to implementing the solution. DSS uses analytical models, specialized databases, a decision maker's own insights and judgments, and computer-based modeling processes to support business decisions.

Business Intelligence (BI) is a set of tools and techniques that are utilized to turn raw data into useful information for business analysis. 

Business Decision Support (BDS) and Enterprise Relational Database (ERD) are not support systems utilized in supply chain management.

108.

Which costing methodology is used to collect costs of a given time frame and averaged over the total number of units produced?

  • Process costing

  • Job-order costing

  • Operation costing

  • Life cycle costing

Correct answer: Process costing

Process costing is used in continuous or mass production environments where there is minimal finished good variation driving additional labor or material consumption. This allows costs to be easily distributed over the total quantity of product produced.

Job-order costing is used when costs can be tracked by specific lots, batches, or customer-specific requirements/orders. 

Operation costing is used in assemble-to-order or postponement type environments. 

Life cycle costing is a tool used to assess costs over the entire time of product ownership but is not used for accounting purposes.

109.

The frozen zone’s capacity and materials are promised to specific orders. What is the extent of the frozen zone defined by?

  • Demand time fence

  • Planning time fence

  • Delivery time fence

  • Production time fence

Correct answer: Demand time fence

The demand time fence defines the extent of the frozen zone. Since the frozen zone’s capacity and materials are already promised, changes cannot be made without resulting in excessive costs.

The planning time fence defines the extent of the slushy zone. The delivery time fence and the production time fence are not time fences used in the master production schedule.

110.

Which statement below is NOT accurate concerning supply chain transformations?

  • If the transformation takes more than one year, the technology is at risk of being obsolete before benefits are felt

  • Transformations normally take more than one year

  • Change management requirements are usually underestimated

  • Organizational KPIs must be carefully selected

Correct answer: If the transformation takes more than one year, the technology is at risk of being obsolete before benefits are felt

Not all transformations are about technology shifts, but the vast majority do include some form of technology change. In today's world, wholesale platform changes are common and made in full knowledge that the technology is being installed within a continuum of upgrades. This is a critical consideration when planning a supply chain transformation, as most of these projects can take at least a year if not more. 

Change management is usually underestimated: management can often have too much confidence in their organization's ability to adapt and adopt, when in fact it is human nature to resist change. 

Organizational KPIs and other improvement metrics must be selected against the change levers that are being pushed in the transformation to be able to adequately track the change and know that the desired outcomes and benefits are being received.

111.

The dollar amount that has been invested in a company by its owners is known as which of the following?

  • Capital

  • Revenue

  • Asset

  • Owners’ equity

Correct answer: Capital

Capital is the dollar amount that has been invested in a company by its owners. These monies are spent on property, plant infrastructure, equipment, and inventory,  

Revenue is the term used to refer to a company’s sales. Assets are tangible or intangible items that add value. Owners’ equity represents the dollar amount left for the owners after liabilities have been paid.

112.

In a stable demand environment, how is average inventory calculated?

  • Safety stock plus half the average lot size

  • Half the average lot size minus safety stock

  • The sum of all order quantities divided by the number of orders placed

  • The sum of all order quantities plus safety stock divided by 12

Correct answer: Safety stock plus half the average lot size

In a stable demand environment with consistent lot sizes, the average inventory can be calculated by adding safety stock to half the average lot size. This assumes, between the beginning and ending inventory levels, half the inventory (plus safety stock) will be available.

The other options are incorrect regarding calculating average inventory in a stable demand environment.

113.

A company deducts component inventory when a finished good is received into stock. What is this process called?

  • Backflushing

  • Material issues

  • Allocation

  • Floor deduction

Correct answer: Backflushing

Receiving a product into finished goods inventory or at an operation count point is referred to as backflushing. Using this process, the system deducts components from inventory based on the finished goods quantity times the bill of materials for the product.

114.

Which of the following is NOT included in the cost of carrying inventory?

  • CSR inventory balance confirmations

  • Obsolete inventory

  • Damaged inventory

  • Labor-to-move material

Correct answer: CSR inventory balance confirmations

Customer service representatives who seek to confirm inventory balances as part of their available to order process is considered an order preparation cost, even though it involves the subject of inventory.

Damaged and obsolete goods impact the total cost of inventory as does the labor required to process the material.

115.

JIT, which has adopted the House of Lean's guiding principles for manufacturing purposes, relies on this program as its core orientation:

  • Culture of involvement

  • Theory of constraints

  • Standardization

  • Reduction of the Seven Wastes

Correct answer: Culture of involvement

The House of Lean, also referred to as the House of Toyota, has a foundation, two supporting pillars, and a roof.

The foundation focuses on standardization and operational stability. The roof is the statement of lean objectives, for example, the elimination of waste. The two supporting pillars are Just-In-Time (JIT) and Jidoka. Jidoka is the concept of training operators to find problems and empowering them to stop production to minimize waste created in defective parts.

Once constructed, the center of the house will represent a culture of continuous improvement and employee involvement. This means employees are viewed as valuable assets to the company and are empowered to be a part of continuous improvement.

Theory of constraints focuses on the mostly technical aspects of bottleneck management. Standardization is a key lean practice and a component of 5S.

116.

Which of the following is a BENEFIT of phantom bills of material allowing for lot-for-lot assembly to the parent?

  • MRP does not require subassemblies to be stocked

  • Subassemblies do not consider capacity to be an issue

  • Setup time becomes less critical

  • Lead times are reduced

Correct answer: MRP does not require subassemblies to be stocked

The ASCM Supply Chain Dictionary defines a phantom assembly as "a bill of material coding and structuring technique used primarily for transient (nonstocked) subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-for-lot." Phantom assemblies do not have to go into and out of stock, which creates the benefit of not having to generate orders for each assembly, so the MRP does not require subassemblies to be stocked. 

Also, pick-lists do not have to be generated in order to withdraw from stock. Much administrative work is eliminated by using phantom assemblies as well as setup time for phantom assemblies are immediately consumed in production.

117.

Which element of the distribution system has the HIGHEST cost associated with it?

  • Transportation

  • Distribution inventory

  • Warehouses

  • Materials handling

Correct answer: Transportation

The transportation element of the distribution system has the highest cost associated with it. The cost associated with transportation accounts for 30% to 60% of the total distribution costs.

The distribution inventory element of the distribution system has the second-highest cost associated with it. Warehouses and materials handling are elements of the distribution system that have costs associated with them, but they are not the highest.

118.

A supplier is experiencing a continuing number of stockouts with many of its customers even though the company has a safety stock setting of 95%. Which of the choices below is the most likely cause of this issue?

  • Poorly functioning ATP

  • Supply-side variability 

  • Demand forecast accuracy

  • Unplanned downtime

Correct answer: Poorly functioning ATP

When the available-to-promise process goes awry, promising orders for product stocks that don't exist can be a nightmare for a company. There could be several causes, here, including poor process governance and poor inventory accuracy in warehouses. The question specified that the problem is an ongoing issue, which implies that something systemic is occurring versus a single event such as unplanned downtime.

While supply-side and demand forecast variability undoubtedly occur, these are accounted for in the safety stock calculation and shouldn't contribute to the unknown uncertainties that are the root cause of the stockouts.

119.

In which stage of corporate responsibility is a company if they are reactive to market pressures in trying to protect their reputation?

  • Defensive

  • Compliance

  • Managerial

  • Strategic

Correct answer: Defensive

Companies without a clear Corporate Social Responsibility (CSR) position will end up in a defensive position in trying to respond to market pressures to defend their reputation.

Compliance is when policies are established to meet regulatory requirements and tend to be minimal. In the managerial stage, CSR is integrated into daily operations. Strategic is when a company realizes they can achieve a competitive advantage by incorporating CSR into its overall strategic vision and mission, and it becomes a core part of its business.

120.

Failure costs can be internal or external. An example of an internal failure cost is:

  • Rework

  • Warranties

  • Returns

  • Field service repairs

Correct answer: Rework

Rework, reinspections, and scrap are examples of internal failure inspections.

Warranty, returns, and field service repairs are external failure costs associated with problems found after the customer receives the product.

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