CPIM (Basics of Supply Chain Management) 4 — Questions and Answers
Question 1: Which supply chain model maps processes into Plan, Source, Make, Deliver, and Return categories?
- SCOR (Supply Chain Operations Reference) model (Correct answer)
- Porter's Value Chain model
- Balanced Scorecard framework
- CPFR framework
Correct answer: SCOR (Supply Chain Operations Reference) model
The SCOR model, developed by APICS/ASCM, provides a standardized framework with five process categories: Plan, Source, Make, Deliver, and Return.
Question 2: A company uses ABC analysis for inventory classification. Items classified as 'A' are characterized by:
- High volume and low unit value
- Low volume and high unit value
- High annual dollar usage and tight control requirements (Correct answer)
- Medium volume and medium value requiring moderate attention
Correct answer: High annual dollar usage and tight control requirements
ABC analysis classifies 'A' items as those with the highest annual dollar value (typically ~80% of value from ~20% of items), requiring the tightest management controls.
Question 3: Which forecasting method uses a weighted average of past observations, giving more weight to recent data?
- Simple moving average
- Exponential smoothing (Correct answer)
- Regression analysis
- Delphi method
Correct answer: Exponential smoothing
Exponential smoothing assigns exponentially decreasing weights to older observations, making recent data more influential in the forecast.
Question 4: The 'cash-to-cash cycle time' metric measures:
- The time to convert a customer order into a cash receipt
- Days inventory outstanding + days sales outstanding - days payable outstanding (Correct answer)
- The speed at which cash flows through the banking system
- The time between payroll cycles in the organization
Correct answer: Days inventory outstanding + days sales outstanding - days payable outstanding
Cash-to-cash cycle time = DIO + DSO – DPO, measuring how long cash is tied up in the operating cycle before being recovered.
Question 5: Which type of waste, as defined by lean manufacturing principles, refers to overproducing more than what is currently needed?
- Waiting
- Overproduction (Correct answer)
- Defects
- Transportation
Correct answer: Overproduction
Overproduction is considered the worst lean waste because it generates excess inventory, consumes resources prematurely, and masks other problems.
Question 6: A supply chain with a high degree of 'horizontal integration' means the company:
- Controls multiple tiers of its supply chain from raw material to end customer
- Has expanded its operations across competitors or similar businesses at the same supply chain tier (Correct answer)
- Operates warehouses and distribution centers in multiple geographic regions
- Integrates its IT systems with all tier-1 suppliers
Correct answer: Has expanded its operations across competitors or similar businesses at the same supply chain tier
Horizontal integration involves expanding at the same level of the supply chain, such as a manufacturer acquiring a competing manufacturer.
Question 7: What is the primary benefit of Collaborative Planning, Forecasting, and Replenishment (CPFR)?
- It eliminates the need for safety stock across the supply chain
- It improves forecast accuracy and reduces inventory by sharing demand data between trading partners (Correct answer)
- It automates purchase order generation without human intervention
- It standardizes product packaging across all supply chain members
Correct answer: It improves forecast accuracy and reduces inventory by sharing demand data between trading partners
CPFR enables retailer and supplier to jointly develop forecasts and replenishment plans, reducing forecast errors and supply chain inefficiencies.
CPIM (Basics of Supply Chain Management) 4
Which supply chain model maps processes into Plan, Source, Make, Deliver, and Return categories?