CPIM Strategic Management and Performance Metrics 2 — Questions and Answers
Question 1: Which performance metric measures the percentage of customer orders shipped complete and on time?
- Fill rate
- Perfect order fulfillment rate (Correct answer)
- On-time delivery rate
- Order cycle time
Correct answer: Perfect order fulfillment rate
Perfect order fulfillment rate measures the percentage of orders delivered complete, on time, undamaged, and with accurate documentation.
Question 2: In CPIM, what does 'inventory turnover' measure?
- The number of times inventory is replenished per year relative to average inventory value (Correct answer)
- The time required to process a single replenishment order
- The percentage of inventory that becomes obsolete annually
- The ratio of finished goods to raw materials in stock
Correct answer: The number of times inventory is replenished per year relative to average inventory value
Inventory turnover = Cost of Goods Sold / Average Inventory Value, indicating how many times inventory is cycled through per period.
Question 3: What is 'days of supply' (DOS) as a supply chain metric?
- The average number of days between supplier deliveries
- The number of days the current inventory can cover future demand at the average daily usage rate (Correct answer)
- The number of days required to process a purchase order
- The lead time from order placement to receipt
Correct answer: The number of days the current inventory can cover future demand at the average daily usage rate
Days of supply = (Inventory on Hand) / (Average Daily Usage), showing how long current stock will last before a stockout occurs.
Question 4: Which CPIM concept measures the actual output of a process compared to the planned or theoretical output?
- Utilization
- Efficiency (Correct answer)
- Throughput ratio
- Overall Equipment Effectiveness (OEE)
Correct answer: Efficiency
Efficiency = (Actual Output / Standard Output) × 100, comparing actual performance to the engineered standard.
Question 5: A company achieves a 95% on-time delivery rate but ships incomplete orders 10% of the time. What is the approximate perfect order rate?
- 95%
- 90%
- 85.5% (Correct answer)
- 80%
Correct answer: 85.5%
Perfect order rate ≈ 0.95 × 0.90 = 0.855 or 85.5%, since each dimension must be multiplied together (assuming independence).
Question 6: What does 'cash-to-cash cycle time' measure in supply chain performance?
- Time from customer payment to supplier payment
- Time from paying for materials to receiving payment from customers (Correct answer)
- The time required to collect accounts receivable
- Average days payable outstanding minus days sales outstanding
Correct answer: Time from paying for materials to receiving payment from customers
Cash-to-cash cycle time = Days Inventory Outstanding + Days Sales Outstanding – Days Payable Outstanding, measuring how long cash is tied up in operations.
CPIM Strategic Management and Performance Metrics 2
Which performance metric measures the percentage of customer orders shipped complete and on time?