CPIM Sample 3 — Questions and Answers
Question 1: Which of the following is a characteristic of a make-to-order (MTO) production environment?
- Finished goods are stocked based on forecasts
- Customer lead time is shorter than total manufacturing lead time
- Production begins only after a customer order is received (Correct answer)
- Safety stock is held at the finished goods level
Correct answer: Production begins only after a customer order is received
In MTO, production is initiated only upon receipt of a customer order, meaning no finished goods inventory is maintained and each product is made to customer specification.
Question 2: In supply chain management, the 'bullwhip effect' refers to:
- Increasing variability in demand signals as you move upstream in the supply chain (Correct answer)
- Decreasing lead times caused by better supplier coordination
- The amplification of service levels from retailer to manufacturer
- Reduction in order quantities due to volume discounts
Correct answer: Increasing variability in demand signals as you move upstream in the supply chain
The bullwhip effect describes how small fluctuations in retail demand can amplify into large swings in orders upstream, caused by factors like demand forecast updates and order batching.
Question 3: Which lean tool is used to visually represent the flow of materials and information in a production process to identify waste?
- 5S methodology
- Poka-yoke
- Value stream mapping (Correct answer)
- SMED
Correct answer: Value stream mapping
Value stream mapping (VSM) is a lean tool that diagrams the current and future state of material and information flows, highlighting non-value-added activities and waste.
Question 4: A company applies ABC analysis to its inventory. Class A items typically represent:
- The largest number of SKUs with low dollar value
- A small percentage of items accounting for the majority of annual dollar usage (Correct answer)
- Items with the highest demand variability
- Items that are most difficult to procure
Correct answer: A small percentage of items accounting for the majority of annual dollar usage
ABC analysis classifies inventory by annual dollar usage; Class A items are roughly 10-20% of SKUs but represent approximately 70-80% of total annual dollar usage.
Question 5: The term 'takt time' in lean manufacturing is calculated as:
- Total production time divided by total units produced
- Available production time divided by customer demand rate (Correct answer)
- Customer demand rate divided by available production time
- Setup time plus run time per unit
Correct answer: Available production time divided by customer demand rate
Takt time = Available production time / Customer demand rate; it sets the pace of production to match customer demand and avoid overproduction.
Question 6: Which forecasting method assigns greater weight to more recent data points?
- Simple moving average
- Weighted moving average
- Exponential smoothing (Correct answer)
- Linear regression
Correct answer: Exponential smoothing
Exponential smoothing assigns exponentially decreasing weights to older observations, with the smoothing constant (alpha) controlling the emphasis on recent data.
Question 7: In a just-in-time (JIT) environment, supplier relationships are best characterized as:
- Adversarial with multiple competing suppliers per part
- Long-term partnerships with a reduced number of certified suppliers (Correct answer)
- Transactional, changing suppliers based solely on price
- Arms-length with standardized short-term contracts
Correct answer: Long-term partnerships with a reduced number of certified suppliers
JIT requires highly reliable, frequent deliveries of exact quantities, which is best achieved through long-term partnerships with a small number of certified, trusted suppliers.
CPIM Sample 3
Which of the following is a characteristic of a make-to-order (MTO) production environment?