CPIM Sales and Operations Planning 4 — Questions and Answers
Question 1: Which type of demand should be EXCLUDED when building the statistical baseline forecast in S&OP?
- One-time events such as large tenders or disaster-relief orders (Correct answer)
- Seasonal spikes that recur annually
- Promotional lifts that repeat each year
- Steady base demand from key accounts
Correct answer: One-time events such as large tenders or disaster-relief orders
One-time or non-repeating events distort the statistical model; they should be removed from history and added back as separate manual adjustments.
Question 2: In S&OP, a 'constrained plan' differs from an 'unconstrained plan' in that it:
- Reflects supply and capacity limitations when setting production targets (Correct answer)
- Ignores manufacturing capacity and only focuses on customer demand
- Is used exclusively for financial budgeting purposes
- Is generated automatically without human input
Correct answer: Reflects supply and capacity limitations when setting production targets
A constrained plan adjusts the unconstrained demand signal to reflect real-world limitations in manufacturing capacity, materials, or labor.
Question 3: When a company implements Integrated Business Planning (IBP), the key enhancement over traditional S&OP is:
- Explicit linkage of operational volume plans to financial P&L and strategic objectives (Correct answer)
- Replacing monthly reviews with real-time AI-driven planning
- Eliminating the need for a demand review step
- Restricting participation to the supply chain function only
Correct answer: Explicit linkage of operational volume plans to financial P&L and strategic objectives
IBP extends S&OP by formally connecting the volume and mix plan to financial statements and long-term strategic goals, creating true business-wide alignment.
Question 4: A company uses a 'mixed strategy' in its S&OP production plan. This means it:
- Combines elements of both chase and level strategies to balance costs and service (Correct answer)
- Sources production from both domestic and offshore facilities
- Uses both make-to-stock and make-to-order policies for the same product
- Alternates between different ERP systems each planning cycle
Correct answer: Combines elements of both chase and level strategies to balance costs and service
A mixed strategy blends the workforce stability of level production with some demand-chasing flexibility to achieve a balance between cost efficiency and customer service.
Question 5: Which supply chain condition makes a 'make-to-stock' (MTS) policy MOST appropriate to discuss in S&OP supply review?
- Short customer tolerance times relative to manufacturing lead times (Correct answer)
- Highly customized products with unique configurations per order
- Extremely low demand volumes with high unit costs
- Long manufacturing lead times shorter than customer order lead times
Correct answer: Short customer tolerance times relative to manufacturing lead times
MTS is used when customers expect immediate availability and won't wait for production, so inventory must be built ahead of demand.
Question 6: In S&OP, inventory targets are BEST set based on:
- Desired service level, demand variability, and replenishment lead time (Correct answer)
- Last year's average inventory balance
- The amount of warehouse space currently available
- Whatever minimizes the total number of SKUs carried
Correct answer: Desired service level, demand variability, and replenishment lead time
Safety stock and finished-goods targets should be derived from the desired service level, forecast error (demand variability), and replenishment lead time to balance service and cost.
Question 7: Which S&OP role is PRIMARILY responsible for translating the approved volume plan into a detailed master production schedule (MPS)?
- Master scheduler or production planner (Correct answer)
- Chief financial officer
- Sales director
- Procurement manager
Correct answer: Master scheduler or production planner
The master scheduler disaggregates the S&OP family-level plan into specific products, dates, and quantities to create the MPS.
CPIM Sales and Operations Planning 4
Which type of demand should be EXCLUDED when building the statistical baseline forecast in S&OP?