CPIM Strategic Management of Resources 1 — Questions and Answers
Question 1: Which manufacturing strategy builds products to a standard design and holds finished goods inventory to fill orders immediately?
- Make-to-order (MTO)
- Engineer-to-order (ETO)
- Make-to-stock (MTS) (Correct answer)
- Assemble-to-order (ATO)
Correct answer: Make-to-stock (MTS)
Make-to-stock produces standard products in anticipation of demand, maintaining finished goods inventory to provide immediate delivery to customers.
Question 2: In an 'assemble-to-order' (ATO) environment, the decoupling point is at:
- Raw material storage
- Finished goods warehouse
- Subassembly or component level (Correct answer)
- Customer delivery location
Correct answer: Subassembly or component level
ATO holds inventory at the semi-finished subassembly level and assembles to specific customer configurations only when an order is received.
Question 3: What is the 'product-process matrix' concept used for in manufacturing strategy?
- Mapping products to supplier capabilities
- Aligning the appropriate production process structure with the product's volume and variety characteristics (Correct answer)
- Calculating the total cost of ownership for capital equipment
- Designing quality inspection plans for each product
Correct answer: Aligning the appropriate production process structure with the product's volume and variety characteristics
The product-process matrix maps product volume and variety combinations to appropriate process types (job shop, batch, line, continuous), guiding strategic manufacturing decisions.
Question 4: Which concept describes the phenomenon where small demand fluctuations at the retail level are amplified into large swings upstream in the supply chain?
- Demand sensing
- Bullwhip effect (Correct answer)
- Safety stock amplification
- Lead time variability
Correct answer: Bullwhip effect
The bullwhip effect occurs when demand variability is amplified as it moves upstream in a supply chain, causing excessive inventory swings at wholesale, distribution, and manufacturing levels.
Question 5: A 'make-or-buy' decision in manufacturing strategy should consider which primary factors?
- Employee satisfaction and overtime costs only
- Cost, capacity, core competency, and supply chain risk (Correct answer)
- Marketing strategy and brand positioning exclusively
- Government regulations and export licensing only
Correct answer: Cost, capacity, core competency, and supply chain risk
Make-or-buy decisions weigh factors including total cost, whether the activity is a core competency, available internal capacity, quality control, and supply chain flexibility and risk.
Question 6: What is 'postponement' as a supply chain strategy?
- Delaying payment to suppliers to improve cash flow
- Delaying product differentiation as late as possible in the supply chain to maintain flexibility (Correct answer)
- Postponing capital investment until demand is proven
- Deferring maintenance to reduce short-term costs
Correct answer: Delaying product differentiation as late as possible in the supply chain to maintain flexibility
Postponement (delayed differentiation) keeps products in a generic state as long as possible, adding customization features only when specific customer demand is known.
CPIM Strategic Management of Resources 1
Which manufacturing strategy builds products to a standard design and holds finished goods inventory to fill orders immediately?