Mixed Deck — All CPIM Topics Flashcards

When developing a supply chain risk management strategy, a company identifies that its primary supplier for a key raw material is located in a geopolitically unstable region. Which of the following would be a proactive mitigation strategy?

Answer: Establishing a safety stock policy for the raw material at the company's own facility.

Establishing a safety stock is a proactive mitigation strategy to buffer against potential supply disruptions. This inventory acts as a cushion, allowing operations to continue for a period even if the primary supplier is unable to deliver. While not eliminating the risk, it reduces the immediate impact of a disruption, providing time to activate contingency plans.

In MRP, what is a 'planned order release' (POR)?

Answer: An MRP-generated recommendation to release a production or purchase order at a specific time

A planned order release is a system-generated recommendation that must be reviewed and approved by a planner before becoming a firm order.

Which inventory replenishment strategy is most appropriate for items with highly lumpy or sporadic demand?

Answer: Lot-for-lot (LFL)

Lot-for-lot orders exactly the quantity needed to meet net requirements each period, avoiding excess inventory for items with irregular demand.

What distinguishes a 'push' inventory replenishment system from a 'pull' system?

Answer: Push systems produce and ship based on forecasts; pull systems respond to actual consumption signals

In push systems, inventory is produced or ordered based on forecasts and pushed to the next stage; pull systems replenish only in response to actual demand consumption.

Which technique helps reduce effective lead time by releasing overlapping operations to the shop floor simultaneously?

Answer: Operation overlapping (or lap phasing)

Operation overlapping starts a downstream operation before the upstream operation is fully complete, compressing the total elapsed time for the job.

A key performance indicator (KPI) for a responsive supply chain strategy is most likely to be:

Answer: Order fulfillment lead time.

A responsive supply chain strategy prioritizes reacting quickly and efficiently to customer demand. Order fulfillment lead time, which measures the time from order placement to delivery, is a direct measure of this responsiveness. While other metrics are important, they are more central to other strategies (e.g., total landed cost for an efficient chain).

Which of the following best describes the role of the demand review step in the S&OP process?

Answer: Develop and validate an unconstrained demand plan before supply constraints are applied

The demand review produces an unconstrained demand plan—reflecting market opportunity—which is then tested against supply capability in subsequent S&OP steps.

A company's product has a seasonal index of 1.3 for Q4. If the annual average monthly demand is 1,000 units, what is the expected Q4 monthly demand?

Answer: 1,300 units

A seasonal index of 1.3 means Q4 demand is 30% above average, so 1,000 × 1.3 = 1,300 units.

Which of the following is a key benefit of implementing vendor-managed inventory (VMI) with strategic suppliers?

Answer: Reduced buyer administrative burden and improved supplier visibility into consumption

VMI transfers replenishment responsibility to the supplier who, with consumption visibility, can better optimize delivery frequency and quantities, reducing buyer workload.

A company sources a critical component from a single overseas supplier. Which risk mitigation strategy best addresses supply continuity?

Answer: Qualifying a second source while maintaining the primary supplier relationship

Dual sourcing qualifies an alternative supplier to provide continuity if the primary supplier fails, balancing risk and cost.

Which ABC classification category typically represents the largest number of SKUs but the lowest total value?

Answer: C items

C items represent roughly 50% of SKUs but only about 5% of total inventory value.

A company experiences a sudden one-time spike in demand due to a competitor going out of business. When updating the forecast, the planner should:

Answer: Treat the spike as an outlier and exclude or dampen it from forecast calculations

One-time non-recurring events are outliers that distort the statistical forecast and should be excluded or dampened so they don't inflate future predictions.

Which demand pattern is characterized by a regular, repeating fluctuation tied to the calendar?

Answer: Seasonality

Seasonality refers to repeating demand patterns tied to specific calendar periods such as months, quarters, or seasons.

Which of the following is a key difference between a push and a pull production system?

Answer: Push systems produce to a forecast; pull systems produce in response to actual demand

Push systems schedule production based on forecasts, while pull systems authorize production only when downstream demand signals are received.

Which of the following best describes the primary objective of a Six Sigma quality improvement initiative?

Answer: To reduce process variation and the number of defects to a statistically defined level.

The core focus of Six Sigma is to reduce process variation, which is the root cause of most defects. By using statistical methods (like DMAIC), it aims to achieve a process that produces no more than 3.4 defects per million opportunities (DPMO).

What is the purpose of a gauge R&R (Repeatability and Reproducibility) study?

Answer: Assess whether a measurement system contributes excessive variation relative to the process or specification

Gauge R&R evaluates how much of total observed variation comes from the measurement system itself (repeatability and reproducibility) versus the actual process.

Which demand management technique involves offering discounts or promotions to shift demand from peak to off-peak periods?

Answer: Demand shaping

Demand shaping uses pricing, promotions, or incentives to actively influence the timing and volume of customer demand.

A company has average inventory of $500,000 and annual cost of goods sold of $3,000,000. What is the inventory turnover ratio?

Answer: 6

Inventory turnover = COGS / Average Inventory = $3,000,000 / $500,000 = 6.

In the context of total inventory costs, which of the following would be considered an ordering cost?

Answer: Clerical costs for preparing a purchase order.

Ordering costs are the expenses incurred each time an order is placed, regardless of the quantity ordered. This includes fixed administrative and clerical costs associated with creating and processing a purchase order. Costs like insurance, capital, and spoilage are considered carrying or holding costs, as they are related to the quantity of inventory being stored over time.

Which of the following best describes 'available-to-promise' (ATP) functionality?

Answer: The uncommitted portion of inventory and planned production that can be promised to customers

ATP identifies how much inventory or planned supply is uncommitted and can be allocated to new customer orders.